NFT speculative craze borders on absurd: Sellers buy their own NFTs to drive up prices

The NFT business is something completely new, and that is being exploited by cybercriminals and slickers, to make money with illicit tactics.

An NFT is a digital file of any type: a photo, a video, a document, a music file, etc., which obtains a unique key through a blockchain of a cryptocurrency, and therefore cannot be copied or counterfeited.

This allows digital drawings, selfies, videos, memes, GIFs and other content to be sold that until now had no value because exact copies could be obtained from any digital file. They are also used in games to offer unique content, which you can then sell for more money:

What are NFT or Play-to-earn games, play to earn money, and why do they generate so much controversy

What are NFT or Play-to-earn games, play to earn money, and why do they generate so much controversy

It is understandable that someone wants to pay 5 million euros for the source code of the WWW, but there are people who have become millionaires selling their selfies, or portraits of monkeys cloned by computer.

In the end, everyone does what they want with their money. The problem is when prices are inflated using criminal tactics, such as money laundering or self-purchase of NFTs. Or directly, they try to scam you by selling you fake NFTs.

The firm Chainalysis has carried out a study of the NFT market, and has discovered quite worrying things.

It has detected 262 sellers in major NFT markets that use a tactic called Trade Laundering. It consists of buying your own NFTs that you have for sale, to raise the price.

It is an old technique that was used with stocks or is still used by sellers in auction services like eBay, bidding on your own product to raise the auction price. But it is prohibited, and in the case of stocks, it carries heavy fines, and even jail time.

According to Chainalysis, it has detected how these sellers buy their own NFTs with another cryptocurrency wallet… which then returns the amount to the original wallet. Or on the contrary, there is a transfer of cryptocurrencies from the seller’s wallet, to the one who makes the purchase.

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Some of these cheating sellers have more than 100 ghost wallets from which they buy and sell their own products.

Then they put them up for sale again at a more expensive price, and the previous purchase is recorded in the associated blockchain, giving value to the product: if someone has paid that money for it before, it has value …

It’s a sneaky tactic that doesn’t always work, but when it does, it pays off…. Chainalysis research indicates that 110 of these sellers made nearly $9 million dollars by inflating prices, while 152 sellers lost $416,000.

Another problem detected in the investigation is money laundering: accounts associated with scam operations they have bought NFTs worth more than 1 million dollars.

If you enter the NFT game, the maximum precaution must be taken: make sure where you spend your money, and if what you acquire has real value.