WTF is Wash Trading?
No no, it doesn’t mean you’ll end up WASHing dishes at a restaurant if you start TRADING.
- NFT sales skyrocketed in 2021🚀, everyone was making money by selling NFTs but who was buying them for such two comma figures? What if the answer was The Sellers themselves?
- All thanks to Beeple’s Everydays-2020 collection and Bored Ape Yacht Club 🙊 which demonstrated a growing interest and demand for NFT projects.
The influx of major investments into the space also contributed to the market's explosive growth.
So yeah Wash Trading…?
Wash trading is a trading strategy in which the buyer and the seller is effectively on both sides of the trade, and a person will essentially sell an asset to the illusion that a particular asset is trading far more than it actually is.
.png)
This is not allowed in regular financial markets because it can make other people think there is more demand for something than there really is, and it can also change the price of things in a way that isn't fair.
Wait! What? You buy and sell it to yourself and make money?
Sometimes, people make fake deals to buy and sell things in order to trick other people into thinking the things are worth more money than they really are. They might do this to make the things look more valuable, so they can sell them and make money.
- For ex: In Feb 2022, Melania Trump🤹♀️ launched her NFT collection- “Head of State”. It was minted on the Solana Blockchain. She sold her first NFT from this collection for a winning bid of 1800 SOL which was worth $170k at that time.
- The address which minted the NFT 473k USDC to an intermediary address. This intermediary address swapped some of that USDC for just over 1,800 SOL.
This 1,800 SOL was sent to a third address which was the one that purchased it.
Melania Trump be like..
.png)
- On Oct 28, 2021, CryptoPunk 9998 was sold for 124,457 ether (ETH), worth around $532 million at the time.🤯
.png)
- Etherscan reported that the buyer used a flash loan to pay 124,457 ETH to the CryptoPunk’s seller, which was then transferred to the seller’s wallet.