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Interesting tidbit: "An aside on NFTs Because they’re “unique” objects, NFTs are a perfect vehicle for wash trading. You can easily ensure you only wash trade

Interesting tidbit: "An aside on NFTs Because they’re “unique” objects, NFTs are a perfect vehicle for wash trading. You can easily ensure you only wash trade to yourself. The common scheme is to wash trade with yourself until some credible dunce buys the NFT from you at your manufactured “fair” value, leaving you to walk away with real money." It's such a stupidly simple idea it's actually brilliant.

paulpauper 5y ago
not really if the fees are high and tons of ppl are doing this with few sales. the nft market is so unbelievably saturated.
MikeDelta 5y ago
Reminds me of this sketch from Enfield and Whitehouse https://youtu.be/ZiJa9diJOMk https://youtu.be/ZiJa9diJOMk
- crtasm 5y ago
  From loadsamoney to lots of money! https://genius.com/Harry-enfield-loadsamoney-doin-up-the-house-lyrics https://genius.com/Harry-enfield-loadsamoney-doin-up-the-hou...
belter 5y ago
In a complex system, whose algorithmic essence is price forgery, value randomness and pump and dump as a strategy...Would argue that achieving maximum manipulation is simply the algorithm optimizing for its "best".
masona 5y ago
The fine art market has been doing this for decades by using auction records to set prices.
- spoiler 5y ago
  You can't buy and sell the same item to yourself at an auction multiple times... Or am I missing the point you're trying to make? Also, the value is in the art, not the receipt. With NFT, that's not the case... Unless it's an exchangeable NFT, like one you can exchange for a service (e.g. as a tick) or some goods, but that's not really how NFTs are being used.
  - Cthulhu_ 5y ago
    > You can't buy and sell the same item to yourself at an auction multiple times You don't have to; you get someone else to buy it, hold onto it for a few years, then sell it again on a different auction. It doesn't have to be short-term. > Also, the value is in the art, not the receipt. I would argue the value is not in the art in real life either, that is, it's not the artwork itself, but the 'object', its history, what people have paid for it in the past and how it increased in value over time. The main thing is that it has to be rare or one of a kind. I mean more understandable is expensive, collectable whiskeys. They make a limited batch, say 100 bottles, sell it for $100 each. Ten years later, 90% of those bottles have been opened and drank, another 10% of the remainder was lost or broken, leaving you with nine bottles of a once-and-never-again rare batch. Collectors will pay more for it. Anyway, NFT's, like cryptocurrencies, are investment products whose value is determined entirely by whatever a buyer pays for it.
    - yunohn 5y ago
      > It doesn't have to be short-term. This is actually a really important nuance. NFTs/crypto have a really short turnaround time - which means they can run the scam much quicker and at massive scale.
    - gandalfian 5y ago
      Though whiskey doesn't age in the bottle making it a weird investment in itself. The ten year old bottle I bought twenty years ago now costs much more to buy it again, is rarer but the whiskey is not better, it forever stays at ten years old once out of the barrel.
- iechoz6H 5y ago
  I guess the main difference between the two markets is that with fine art the object is genuinely rare/unique.
  - noneeeed 5y ago
    While that's true, in many ways huge chunks of the fine art market exist purely as objects in warehouses, normally in freeports such as those in Switzerland, that are simply traded back and forth, often never seeing the light of day. The art market is really weird in many ways. Both the Freakonomics podcast and Malcome Gladwell's Revisionist Histories have done episodes in the last year or so on the market.
  - ASalazarMX 5y ago
    Banksy agrees and winks.
doopy1 5y ago
I see this concept of NFT was trading posited all over the place, but it should be easy to prove, yet no one has been able to produce tangible evidence, besides the occasional single flashloan based sale... which eats a tone in gas. Sure there are probably some wash trades here and there, but why is it so hard for most folks to believe that this is in fact a huge market driven by speculation?
- joosters 5y ago
  Only the really obvious wash trades get spotted - e.g. https://www.bloomberg.com/news/articles/2021-10-29/here-s-a-532-million-nft-trade-that-wasn-t-what-it-appeared https://www.bloomberg.com/news/articles/2021-10-29/here-s-a-... , because half-decent manipulators will have the sense to trade between different wallet addresses and obfuscate their money sources.
  - doopy1 5y ago
    Yes you are citing the flashloan wash trade that I mentioned, but the rest I don't really buy at all. You can't just materialize a wallet out of nowhere and use it in a wash trade. Wallets need at least some ETH in order to transact, because you have to pay gas to transact on ethereum. This means that even the best pseudonymous wash traders should be discoverable with chain analysis, or lead to dead ends like tornado.cash. The reality is that you can't find any good examples of this, and that means it's all hypothetical conjecture. It should be quite easy to prove otherwise.
fleddr 5y ago
It's brilliant but not simple at all. You can't just mint an NFT, wash trade it up to a large number and then expect somebody to buy it. This plan would almost always fail. Because it would pop out of nowhere and nobody has ever heard of you. So just like in the traditional art world, you need to be visible and networked. It's very educational to simply browse the big marketplaces. You'll notice that the typical NFT gets zero offers. Almost all trading happens within a tiny scope of hot projects.
- spoiler 5y ago
  > Because it would pop out of nowhere and nobody has ever heard of you. Isn't that everything in the crypto space right now? > So just like in the traditional art world, you need to be visible and networked. People who spend hundreds, if not thousands, on procgen chimpanzee/monkey avatar NFTs would beg to differ.
  - fleddr 5y ago
    I mean known in the crypto community. Surely a random person in the street has never heard of most crypto celebrities, but that wasn't my point. The monkey NFTs that you mention are a perfect example, because they are the best known project after cryptopunks. Massive media reach, real world celebrities and almost all crypto influencers are in. That's what I mean when I say they didn't come out of nowhere. These high value NFT projects come from massive marketing machines to create the hype. You as rando can't just draw something and sell your NFT for a million, it doesn't work that way.
    - spoiler 5y ago
      > I mean known in the crypto community. Surely a random person in the street has never heard of most crypto celebrities, but that wasn't my point. It might be due to my misconceptions about the crypto space then, but I always assumed people just kinda "pop up" relatively often (even if we just constrain this to within the crypto community). The whole crypto space seems to be very very "fast moving" to me, if that makes sense? Back to the monkey avatar NFTs: I was under the impression those also just popped up. There's obviously a "ramp" towards reaching popularity in any community, but that ramp seems to be short (within the crypto community). Also, people will invest in any crypto-game/nft for promise of future profits, regardless whether they believe in the product/nft; they're going for coverage. This is fine for people with cash to burn, but there's more victims than heroes in the get-rich-fast crypto rush. Or is this perception wrong (it might very well be)?
m3kw9 5y ago
This is the real world equivalent to high balling. It’s just that you have to assume every price is washed. This is the actual offer price, not a real price. If you put in a lowball offer I bet they’d eventually sell it to you. Exceptions are famous sets like BAYC
agilob 5y ago
And if you don't have money you can borrow https://mobile.twitter.com/Foone/status/1457749433844568066 https://mobile.twitter.com/Foone/status/1457749433844568066
TrackerFF 5y ago
Yes, it's been painfully obvious from the start. It was the first thing I noticed, once looking into NFTs. I'd be surprised, AMAZED actually, if some of the big NFT collections aren't entrenched in wash trading, to pump up trade volume and price. In fact, I think that in order to successfully launch a NFT collection today, you need to have either: A) Substantial social capital. B) Capital to do the wash trading, or investors to back you. C) Probably both above.
- snowwrestler 5y ago
  You can buy social capital by wash trading the price of the NFTs up to where they are interesting, then giving some to folks with social capital. Only you don’t give them an actual NFT, you give them a sponsor fee that they use to buy one of your NFTs (thereby further validating the interesting price).
- prox 5y ago
  So basically if you are rich you become richer. Same old same old.
- shawabawa3 5y ago
  I personally don't value nfts highly but I'm in a circle with lots of rich crypto early adopters - they absolutely would pay $100k for a bored ape and would consider it a bargain. It's a real status symbol, just in a niche you don't understand. I feel the same way about $100k Patel Phillipe watches but I don't hear everyone talking about how those are only wash trades The platforms where these nfts are sold usually charge 1-2% commission which is expensive for a wash trade
  - TrackerFF 5y ago
    The main difference here is that those paying for a pointer to the bored ape, are paying just that. Nothing more. Anyone can copy that bored ape image, and use it as they want. If you pay $100k for a Patek, that's your watch. It's a physical item - the only way someone's going to steal it, is by physically stealing it from you. Of course, one can argue up and down whether or why a Patek is worth $100k. But IMO it's easier for the layman to argue its worth - it's an item which probably took 12 months to make, using the best materials, world-class craftmanship. The bored ape was generated in microseconds. If I had $100k to spend on whatever, I wouldn't spend it on either of those. But if I was to guess what item will hold its value 5,10,15 years down the line...I'd go for the Patek, 100% of the time. The bored apes are digital beanie babies for rich people.
colinmhayes 5y ago
This is also what makes NFTs great for money laundering. You can use the money from the dirty wallet to make the wash sales, increasing the value of your NFT while cleaning the money at the same time.
- landemva 5y ago
  How do you get lots of actual dirty cash into a dirty wallet?
  - colinmhayes 5y ago
    Take payments in crypto instead of cash.
    - landemva 5y ago
      That is crypto-to-crypto. Your earlier comment said there are dirty wallets. How does someone get dirty cash in to that dirty wallet? For example, which bank allows deposit of dirty cash so the bank account holder can then wire the funds to an exchange?
      - colinmhayes 5y ago
        You can have a dirty wallet from crypto that you've gotten illegally. If you are a merchant on a darknet market your wallet is dirty. If you wrote malware and got someone to pay you a ransom you have a dirty wallet. There are basically an infinite number of ways to have a crypto address with significant holdings that the government has "frozen" so that it can't be converted to fiat. Of course there are other strategies for laundering crypto, this one has the added benefit of actually making money instead of losing it.
        landemva 5y ago
        Oh, so you didn't mean it is great for laundering dirty cash. Maybe cash crimes stopped when NFTs arrived. This is good news for law enforcement because of the public ledger showing all transactions forever.
latchkey 5y ago
Any market with insufficient liquidity and an easy way to trade, is ripe for this. I'm sure you could look at the price history of all sorts of stuff on Ebay and Amazon and see many many cases of this. Imagine a seller buying their own products cheaply and giving reviews. Then come back and raise the prices when the product gets listed higher up in the search results. I recently bought some KF94 masks on Amazon cause they were crazy cheap. Came back a few days later and the price went from $8->$25. A few days after that, the entire listing was gone.
joering2 5y ago
But shilling bid is illegal regardless of how you bid. While crypto can be made harder to trace than fiat, the fact of the matter is, someone have commited crime. With millions of dollars flying on all sorts of NFT exchanges/auctions [1], sooner or later some government will crack a case and make it very public in a form of a warning to others. [1] https://nouns.wtf/ https://nouns.wtf/

paulpauper 5y ago

not really if the fees are high and tons of ppl are doing this with few sales. the nft market is so unbelievably saturated.

MikeDelta 5y ago

Reminds me of this sketch from Enfield and Whitehouse https://youtu.be/ZiJa9diJOMk https://youtu.be/ZiJa9diJOMk

crtasm 5y ago
From loadsamoney to lots of money! https://genius.com/Harry-enfield-loadsamoney-doin-up-the-house-lyrics https://genius.com/Harry-enfield-loadsamoney-doin-up-the-hou...

belter 5y ago

In a complex system, whose algorithmic essence is price forgery, value randomness and pump and dump as a strategy...Would argue that achieving maximum manipulation is simply the algorithm optimizing for its "best".

masona 5y ago

The fine art market has been doing this for decades by using auction records to set prices.

spoiler 5y ago
You can't buy and sell the same item to yourself at an auction multiple times... Or am I missing the point you're trying to make? Also, the value is in the art, not the receipt. With NFT, that's not the case... Unless it's an exchangeable NFT, like one you can exchange for a service (e.g. as a tick) or some goods, but that's not really how NFTs are being used.
- Cthulhu_ 5y ago
  > You can't buy and sell the same item to yourself at an auction multiple times You don't have to; you get someone else to buy it, hold onto it for a few years, then sell it again on a different auction. It doesn't have to be short-term. > Also, the value is in the art, not the receipt. I would argue the value is not in the art in real life either, that is, it's not the artwork itself, but the 'object', its history, what people have paid for it in the past and how it increased in value over time. The main thing is that it has to be rare or one of a kind. I mean more understandable is expensive, collectable whiskeys. They make a limited batch, say 100 bottles, sell it for $100 each. Ten years later, 90% of those bottles have been opened and drank, another 10% of the remainder was lost or broken, leaving you with nine bottles of a once-and-never-again rare batch. Collectors will pay more for it. Anyway, NFT's, like cryptocurrencies, are investment products whose value is determined entirely by whatever a buyer pays for it.
  - yunohn 5y ago
    > It doesn't have to be short-term. This is actually a really important nuance. NFTs/crypto have a really short turnaround time - which means they can run the scam much quicker and at massive scale.
  - gandalfian 5y ago
    Though whiskey doesn't age in the bottle making it a weird investment in itself. The ten year old bottle I bought twenty years ago now costs much more to buy it again, is rarer but the whiskey is not better, it forever stays at ten years old once out of the barrel.
iechoz6H 5y ago
I guess the main difference between the two markets is that with fine art the object is genuinely rare/unique.
- noneeeed 5y ago
  While that's true, in many ways huge chunks of the fine art market exist purely as objects in warehouses, normally in freeports such as those in Switzerland, that are simply traded back and forth, often never seeing the light of day. The art market is really weird in many ways. Both the Freakonomics podcast and Malcome Gladwell's Revisionist Histories have done episodes in the last year or so on the market.
- ASalazarMX 5y ago
  Banksy agrees and winks.

doopy1 5y ago

I see this concept of NFT was trading posited all over the place, but it should be easy to prove, yet no one has been able to produce tangible evidence, besides the occasional single flashloan based sale... which eats a tone in gas. Sure there are probably some wash trades here and there, but why is it so hard for most folks to believe that this is in fact a huge market driven by speculation?

joosters 5y ago
Only the really obvious wash trades get spotted - e.g. https://www.bloomberg.com/news/articles/2021-10-29/here-s-a-532-million-nft-trade-that-wasn-t-what-it-appeared https://www.bloomberg.com/news/articles/2021-10-29/here-s-a-... , because half-decent manipulators will have the sense to trade between different wallet addresses and obfuscate their money sources.
- doopy1 5y ago
  Yes you are citing the flashloan wash trade that I mentioned, but the rest I don't really buy at all. You can't just materialize a wallet out of nowhere and use it in a wash trade. Wallets need at least some ETH in order to transact, because you have to pay gas to transact on ethereum. This means that even the best pseudonymous wash traders should be discoverable with chain analysis, or lead to dead ends like tornado.cash. The reality is that you can't find any good examples of this, and that means it's all hypothetical conjecture. It should be quite easy to prove otherwise.

fleddr 5y ago

It's brilliant but not simple at all. You can't just mint an NFT, wash trade it up to a large number and then expect somebody to buy it. This plan would almost always fail. Because it would pop out of nowhere and nobody has ever heard of you. So just like in the traditional art world, you need to be visible and networked. It's very educational to simply browse the big marketplaces. You'll notice that the typical NFT gets zero offers. Almost all trading happens within a tiny scope of hot projects.

spoiler 5y ago
> Because it would pop out of nowhere and nobody has ever heard of you. Isn't that everything in the crypto space right now? > So just like in the traditional art world, you need to be visible and networked. People who spend hundreds, if not thousands, on procgen chimpanzee/monkey avatar NFTs would beg to differ.
- fleddr 5y ago
  I mean known in the crypto community. Surely a random person in the street has never heard of most crypto celebrities, but that wasn't my point. The monkey NFTs that you mention are a perfect example, because they are the best known project after cryptopunks. Massive media reach, real world celebrities and almost all crypto influencers are in. That's what I mean when I say they didn't come out of nowhere. These high value NFT projects come from massive marketing machines to create the hype. You as rando can't just draw something and sell your NFT for a million, it doesn't work that way.
  - spoiler 5y ago
    > I mean known in the crypto community. Surely a random person in the street has never heard of most crypto celebrities, but that wasn't my point. It might be due to my misconceptions about the crypto space then, but I always assumed people just kinda "pop up" relatively often (even if we just constrain this to within the crypto community). The whole crypto space seems to be very very "fast moving" to me, if that makes sense? Back to the monkey avatar NFTs: I was under the impression those also just popped up. There's obviously a "ramp" towards reaching popularity in any community, but that ramp seems to be short (within the crypto community). Also, people will invest in any crypto-game/nft for promise of future profits, regardless whether they believe in the product/nft; they're going for coverage. This is fine for people with cash to burn, but there's more victims than heroes in the get-rich-fast crypto rush. Or is this perception wrong (it might very well be)?

m3kw9 5y ago

This is the real world equivalent to high balling. It’s just that you have to assume every price is washed. This is the actual offer price, not a real price. If you put in a lowball offer I bet they’d eventually sell it to you. Exceptions are famous sets like BAYC

agilob 5y ago

And if you don't have money you can borrow https://mobile.twitter.com/Foone/status/1457749433844568066 https://mobile.twitter.com/Foone/status/1457749433844568066

TrackerFF 5y ago

Yes, it's been painfully obvious from the start. It was the first thing I noticed, once looking into NFTs. I'd be surprised, AMAZED actually, if some of the big NFT collections aren't entrenched in wash trading, to pump up trade volume and price. In fact, I think that in order to successfully launch a NFT collection today, you need to have either: A) Substantial social capital. B) Capital to do the wash trading, or investors to back you. C) Probably both above.

snowwrestler 5y ago
You can buy social capital by wash trading the price of the NFTs up to where they are interesting, then giving some to folks with social capital. Only you don’t give them an actual NFT, you give them a sponsor fee that they use to buy one of your NFTs (thereby further validating the interesting price).
prox 5y ago
So basically if you are rich you become richer. Same old same old.
shawabawa3 5y ago
I personally don't value nfts highly but I'm in a circle with lots of rich crypto early adopters - they absolutely would pay $100k for a bored ape and would consider it a bargain. It's a real status symbol, just in a niche you don't understand. I feel the same way about $100k Patel Phillipe watches but I don't hear everyone talking about how those are only wash trades The platforms where these nfts are sold usually charge 1-2% commission which is expensive for a wash trade
- TrackerFF 5y ago
  The main difference here is that those paying for a pointer to the bored ape, are paying just that. Nothing more. Anyone can copy that bored ape image, and use it as they want. If you pay $100k for a Patek, that's your watch. It's a physical item - the only way someone's going to steal it, is by physically stealing it from you. Of course, one can argue up and down whether or why a Patek is worth $100k. But IMO it's easier for the layman to argue its worth - it's an item which probably took 12 months to make, using the best materials, world-class craftmanship. The bored ape was generated in microseconds. If I had $100k to spend on whatever, I wouldn't spend it on either of those. But if I was to guess what item will hold its value 5,10,15 years down the line...I'd go for the Patek, 100% of the time. The bored apes are digital beanie babies for rich people.

colinmhayes 5y ago

This is also what makes NFTs great for money laundering. You can use the money from the dirty wallet to make the wash sales, increasing the value of your NFT while cleaning the money at the same time.

landemva 5y ago
How do you get lots of actual dirty cash into a dirty wallet?
- colinmhayes 5y ago
  Take payments in crypto instead of cash.
  - landemva 5y ago
    That is crypto-to-crypto. Your earlier comment said there are dirty wallets. How does someone get dirty cash in to that dirty wallet? For example, which bank allows deposit of dirty cash so the bank account holder can then wire the funds to an exchange?
    - colinmhayes 5y ago
      You can have a dirty wallet from crypto that you've gotten illegally. If you are a merchant on a darknet market your wallet is dirty. If you wrote malware and got someone to pay you a ransom you have a dirty wallet. There are basically an infinite number of ways to have a crypto address with significant holdings that the government has "frozen" so that it can't be converted to fiat. Of course there are other strategies for laundering crypto, this one has the added benefit of actually making money instead of losing it.
      - landemva 5y ago
        Oh, so you didn't mean it is great for laundering dirty cash. Maybe cash crimes stopped when NFTs arrived. This is good news for law enforcement because of the public ledger showing all transactions forever.

latchkey 5y ago

Any market with insufficient liquidity and an easy way to trade, is ripe for this. I'm sure you could look at the price history of all sorts of stuff on Ebay and Amazon and see many many cases of this. Imagine a seller buying their own products cheaply and giving reviews. Then come back and raise the prices when the product gets listed higher up in the search results. I recently bought some KF94 masks on Amazon cause they were crazy cheap. Came back a few days later and the price went from $8->$25. A few days after that, the entire listing was gone.

joering2 5y ago

But shilling bid is illegal regardless of how you bid. While crypto can be made harder to trace than fiat, the fact of the matter is, someone have commited crime. With millions of dollars flying on all sorts of NFT exchanges/auctions [1], sooner or later some government will crack a case and make it very public in a form of a warning to others. [1] https://nouns.wtf/ https://nouns.wtf/