NFT Wash Trading: False Volume & Unethical Practices Exposed!

• NFT Wash Trading is a form of market manipulation where a single trader is both the buyer and seller of an asset in order to create misleading data and inflate trading volumes.
• It can be used to attract regulatory scrutiny and incentivize users by artificially inflating figures for rewards.
• Forbes analysis suggests that over 50% of all Bitcoin trade volume is fake.

What Is NFT Wash Trading?

NFT Wash Trading is a form of market manipulation where a single trader acts as both the buyer and seller in a transaction, creating false data and inflating trading volumes. This practice isn’t exclusive to non-fungible tokens (NFTs) but can be observed across other digital assets like Bitcoin and traditional stocks as well. For example, imagine you own a cryptopunk and you list it for sale on an NFT marketplace like Opensea or Blur. With another cryptocurrency wallet you control, you buy the collectible from yourself – while still owning both the token and crypto used to pay for it. According to Chainalysis, some wallets have made over 800 sales to self-funded wallets.

Why Does Crypto And NFT Wash Trading Happen?

Despite being considered unethical by many, wash trading does have its benefits for traders looking to take advantage of incentives offered by platforms or brokerages. Token Airdrops are one such incentive where blockchain protocols reward users with crypto assets when they complete certain tasks or join their network – wash trading helps users artificially inflate their figures so they can qualify for greater rewards than would otherwise be possible. Furthermore, Forbes analysis reveals that over 50% of all Bitcoin trade volume could be falsely inflated due to wash trading activities taking place on exchanges across the globe.

Are There Legal Consequences Of NFT Wash Trading?

While not explicitly illegal in most jurisdictions, regulators often take an interest in potential cases of market manipulation – especially when high-value assets are involved or if there is suspicion that investors may have been misled about true trade volumes on platforms like Polygon or Ethereum Classic (EC). The SEC has also warned investors about potential risks associated with wash trades after noting that „trades involving two related parties who are acting together may appear legitimate but are actually conducted without economic substance.“ As non-fungible tokens become increasingly viewed as genuine financial instruments, more stringent regulations may come into effect which could result in stiff penalties for those caught participating in wash trades on public blockchains like Ethereum or Binance Smart Chain (BSC).

How Can I Avoid Washing My NFTs?

The best way to avoid getting caught up in any sort of legal trouble related to wash trading activities is simply not participating at all! Stick with reputable exchanges (like Uniswap), research any platform before investing your hard earned money into it, use cold storage solutions whenever possible, and read through the terms & conditions thoroughly before signing up for anything new online – these small steps can go a long way towards protecting your funds from unscrupulous actors out there looking to make quick profits off unsuspecting traders!


Wash trading remains a moral gray area despite its clear advantages to savvy traders looking for ways around strict regulations imposed by governments worldwide on cryptocurrencies & digital assets alike. While no specific laws exist against this type of activity yet, investors should always exercise caution when dealing with digital markets & look out for signs which might indicate suspicious behavior from other participants involved in transactions – if something doesn’t feel right then don’t do it!