Fraud and Money Laundering Rise in the NFT Market

Chainalysis has revealed substantial volumes of fraudulent trading of non-fungible tokens and an increase in NFT money laundering.

Fraud and Money Laundering Rise in the NFT Market

The report by Chainalysis analysts recorded an increase in fictitious trading in the NFT market and money laundering with the help of non-fungible tokens. 

Fictitious trading involves selling an asset “to itself” to generate transaction history, false liquidity and an increase in the asset’s value. Analysts identified patterns and tracked sales between “self-funded” addresses. 

A total of 262 users were identified who made similar asset transactions 25 times or more. The most active scammer performed 810 transactions. In this group of users, 152 people suffered losses of about $417.000, but 110 users earned over $8.87 million that way. However, the situation may not be complete, as the analysts only examined transactions in ETH and wETH. 

Chainalysis also noted an influx of criminal money into the NFT market. In Q3 2021, the volume of such funds exceeded $1 million, while in Q4, it was already about $1.4 million. Still, these figures look insignificant in the context of the cryptocurrency market, which is estimated at about $8.6 billion.

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