Wash volume across the top six non-fungible token (NFT) markets rose for the fourth straight month, with a combined volume of $580 million. According to a new report from CoinGecko, transaction volume in February 2023 has increased by 126% from $250 million in the previous month. As for the reason for the jump, the report points to an overall recovery in NFT market volume, which hit $1.89 billion in February.
Wash trading is the manipulation of volume or price through repeated trading.
The six markets included in the report are Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks, and LooksRare. X2Y2, Blur, and LooksRare played the largest role in wash trading volume in February, accounting for $280 million (49.7%), $150 million (27.7%), and $80 million (15.1%), respectively. These marketplaces have previously used trading rewards to incentivize users to increase their trading volume.
Two other marketplaces, Magic Eden and OpenSea, reported $590,000 and $42.57 million in wash trades, respectively. On the other hand, CryptoPunks did not detect any NFT wash trading, according to the report. According to the CoinGecko report, NFT wash trading together accounted for 23.4% of the “unadjusted volume” in the industry’s six largest markets.
While wash trading is illegal in traditional financial markets, the problem can be found in the broader crypto space and NFTs due to the lack of clear regulation. Back in January, investor Mark Cuban said fake trading would lead to the next "implosion" of the crypto market. Meanwhile, new artificial intelligence-based techniques have surfaced aimed at solving problems in the NFT market, including wash trading.
A recent scam involving a website promoting a fake BLUR token airdrop led to the successful theft of $300,000, Cointelegraph reported on March 16.
