The NFT market saw an uptick in wash trading following a recovery in NFT marketplace trading volume which hit $1.89 billion in February.
The top six nonfungible token (NFT) marketplaces saw a rise in NFT wash trading for the fourth straight month with a total volume of $580 million.
According to a new report from CoinGecko, February 2023 witnessed a 126% increase from the previous month’s volume of $250 million. As for a reason for the jump, the report points to a correlation with the overall recovery of NFT marketplace trading volume, which hit $1.89 billion in February.
The six marketplaces included in the report were Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks and LooksRare. X2Y2, Blur and LooksRare played the largest roles in February’s volume for NFT wash trading with $280 million (49.7%), $150 million (27.7%) and $80 million (15.1%), respectively.
These marketplaces have previously incentivized users to increase trading volume via transaction rewards.
The other two marketplaces, Magic Eden and OpenSea, have a reported $590,000 and $42.57 million in NFT wash trading. CryptoPunks, on the other hand, didn’t see any NFT wash trading, according to the report.
Related: 70% of unregulated exchange transactions are wash trading: NBER study
The CoinGecko report revealed NFT washing trading to have made up a combined 23.4% of “unadjusted trading volume” across the industry’s six largest marketplaces. Wash trading of NFTs is the manipulation of trade volume or price through repeated transactions.
While in traditional financial markets, wash trading is illegal, due to a lack of clear regulations this issue can be found in both the broader crypto space and with NFTs.
Back in January, crypto investor Mark Cuban said that wash trading will cause the next “implosion” in the crypto market. New artificial intelligence-based technology has surfaced, which aims to troubleshoot issues in the NFT market including wash trading.
On March 16 a scam surfaced of fake Blur token airdrop websites, from which $300k was successfully stolen.