Nonfungible token (NFT) marketplaces experienced a rise in NFT wash trading for the fourth consecutive month. With a total volume of $580 million, according to a recent report by CoinGecko. This represents a 126% increase from the previous month’s volume of $250 million. The report attributes the spike to the overall recovery of NFT marketplace trading volume, which reached $1.89 billion in February.
NFT Wash trading involves the manipulation of trading volume or price through repeated transactions. It was found in six marketplaces, including Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks, and LooksRare. X2Y2, Blur, and LooksRare played the most significant roles in February’s wash trading volume. With $280 million (49.7%), $150 million (27.7%), and $80 million (15.1%), respectively. Magic Eden and OpenSea reported $590,000 and $42.57 million in wash trading, respectively. However, CryptoPunks did not witness any NFT wash trading, according to the report.
Wash trading made up a combined 23.4% of “unadjusted trading volume” across the six largest marketplaces in the industry. Wash trading is illegal in traditional financial markets. But the lack of clear regulations in the broader crypto space and with NFTs has made it a prevalent issue. In January, investor Mark Cuban warned that wash trading could cause the next “implosion” in the crypto market. However, new artificial intelligence-based technology has emerged to address issues in the NFT market, including wash trading.
The NFT market has not been immune to scams either. Recently, a scam involving websites promoting fake BLUR token airdrops resulted in the theft of $300,000.