Fake NFT trading netted almost $9 million to scammers

Chainalysis analysts have studied the market and report that in 2021, 110 fraudulent traders “earned” about $8.9 million on fictitious NFT trading.

It is worth noting that the study was focused only on transactions made in Ethereum and Wrapped Ethereum, which means that a significant amount of fraudulent transactions was probably left behind.

The term “fictitious trading” in the company means transactions in which the seller is on both sides of the transaction, that is, he tries to create the appearance of liquidity and increased value of his goods.

The point of fictitious NFT trading is to make the NFT appear more valuable than it really is by “selling it” to a new wallet that is also controlled by the owner. In theory, doing this with NFT is very simple, because many trading platforms allow users to trade by simply connecting a wallet to the platform, and do not require to identify themselves.explain the researchers.

Last year, the company’s experts reported that at least $44.2 billion was associated with NFTs and related smart contracts, while in 2020 this figure was only $106 million. It is not at all surprising that along with the popularity of NFTs, the number of scammers who are interested in this topic is also growing.

With the help of blockchain analysis, we can track fictitious NFT trading: we track NFT sales to addresses that are self-funded, meaning they are funded either from the seller’s address or from the address that originally funded the seller’s address. This shows that some NFT sellers are running hundreds of fictitious trades. the report says.

In this way, the experts were able to identify 262 users who sold NFT to self-funded addresses more than 25 times, with more than half of them losing money paying for air. So, 110 detected fraudulent traders “earned” a total of about $8.9 million, while the rest of the fraudsters lost $416,984 on such transactions.

It is noted that the money earned “most likely came from sales to unsuspecting buyers who believed that the NFT they purchased was growing in price, being sold from one individual collector to another.”

In terms of money laundering, Chainalysis writes that the amount of funds injected into NFT trading platforms from malicious addresses increased significantly in the third quarter of 2021, exceeding $1,000,000 in total.

That figure rose again in the fourth quarter to $1.4 million. In both quarters, the vast majority of this activity came from fraudulent addresses sending funds to NFT trading venues to make purchases.

The researchers write that the report will clearly demonstrate to scammers that fictitious NFT trading is hardly a good strategy, since it rarely brings profit, and such transactions can be easily traced.

Let me remind you that we also wrote that Bug on OpenSea allows buying NFTs at reduced prices, and also that Hackers are interested in NFT and hack Nifty Gateway users.

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