By Philip Maina
12 hours agoMon Feb 27 2023 13:37:27
Reading Time: 2 minutes
- NFT wash trades worth over $500 million have happened on Blur in less than two weeks
- An NFT whale dumped 1,010 NFTs and bought back 991 of the same collectibles
- Wash traders are targeting a bigger share in the upcoming airdrop of season two Blur tokens
NFT wash trades worth over $500 million have happened on Blur in less than two weeks, explaining why Blur has been trumping OpenSea in trading volume since it airdropped its Blur token on February 14. Over the weekend, an NFT whale and a possible wash trader was caught dumping 1,0100 collectibles and later bought back a huge chunk of the same NFTs. Most of the wash trades are meant to increase a trader’s share in the upcoming airdrop of season two Blur tokens scheduled for April.
NFT Whale Dumps 1,010 Collectibles
According to CryptoSlam’s engineer Scott Hawkins, the platform noticed inconsistent behavior on the NFT exchange such as NFT being sold and bought back at prices close to their previous sale value.
In what’s likely the largest NFT dump ever, in the past 48 hours Machi has sold 1,010 NFTs, including:
– 90 BAYC for 5707 ETH
– 191 MAYC for 3091 ETH
– 112 Azuki for 1644 ETH
– 308 Otherdeed for 582 ETH
But he’s not registering much profit for these collections. Why? pic.twitter.com/4NyMF3gzuy
— Andrew T (@Blockanalia) February 24, 2023
One such event was captured by Nansen where known NFT whale Jeffrey Hawng, popularly known as Machi Big Brother, “sold” 1,010 NFTs and later “bought back” 991 of the same collectibles within 48 hours.
Blur Encouraging Wash Trading?
According to Hawkins, Blur doesn’t have measures to detect and thwart wash trades, adding that the platform’s operating model seems to encourage such behaviors. For example, the NFT exchange doesn’t support creator fees, has no platform fees and offers more Blur tokens to those with a high NFT trading volume.
Hawkins added that the wash trading is also a result of the ongoing war between the platform and OpenSea, which has spilled over to the whole NFT space. Blur isn’t the first NFT platform to experience wash trades since LooksRare was also accused of facilitating $8 billion in wash trading when it launched its exchange token.
Since Blur’s NFT wash trading is linked to the upcoming season two Blur token airdrop, the NFT market will likely shake off the false recovery and display the real market condition after April.
On Friday April 9th, professional crypto trader and researcher, Mike McMullen announced in a tweet that he had uncovered $577 million worth of NFTs that were being washed traded on the Blur Network – a decentralized, open source platform which enables the tokenization and trading of assets. According to Mike, the scheme was being carried out through the use of automated market making bots that were engaged in a form of front-running.
The report is particularly interesting given the recent surge in popularity and interest in Non-Fungible Tokens (NFTs). NFTs are unique digital assets which enable owners to tap into the rapidly growing digital collectible market. Despite their growing popularity and the potential for lucrative investments, the NFT market is still largely unmonitored and unregulated.
In his report, Mike explained how the wash trading scheme worked. According to his research, the bots were exploiting the liquidity incentive campaigns offered by several NFT exchanges – including Blur – which reward users for providing liquidity to the market. The bots would post buy and sell orders with virtually no spread. Whenever any of the orders were filled, the bots would then cancel them and create new ones with a larger spread, thus allowing them to undercut the market.
Mike estimates that the scheme generated over $577 million in revenue since December 2020. He also mentioned that he was in the process of filing a crime report with the US Federal Bureau of Investigation.
The role of automated market making bots has been an issue of contention within the crypto space for some time now. Such schemes often result in market manipulation, which can impact prices, as well as investors’ confidence in the market as a whole.
The report by Mike serves as an important reminder that despite the decentralized nature of the crypto market, there is still a risk of manipulation and fraudulent activity. It is therefore important for investors to remain vigilant and to do their research before investing in any tokens, NFTs or digital assets.