- Non-fungible tokens skyrocketed in 2021 riding the broader cryptocurrency boom.
- In 2021, around $44 billion worth of crypto was sent to NFT-related smart contracts, up from $106 million in 2020, according to Chainalysis.
- The firm identified two rampant schemes criminals used in 2021: wash trading and money laundering.
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Non-fungible tokens skyrocketed in 2021, riding the broader cryptocurrency boom, and criminals took advantage.
NFTs — digital representations of artwork, sports cards, or other collectibles tied to a blockchain — have surged in popularity as investors from Wall Street and Hollywood get onboard.
In 2021 alone, around $44 billion worth of crypto was sent to NFT-related smart contracts, up from just $106 million in 2020, according to blockchain analytics firm Chainalysis.
But with this elevated consciousness came an increase in crimes. Here are two rampant schemes Chainlysis has tracked in the past year.
Wash trading
Wash trading is the illegal process in which a seller is on both sides of a trade to manipulate an asset’s value and
liquidity
. This typically occurs in crypto exchanges that attempt to boost their trading volumes.
In the case of NFTs, an investor would sell a token for a higher price to a wallet that he also owns — a relatively seamless process in this space where there is no need to disclose one’s identity, Chainlysis explained.
For 2021, the firm found that while most NFT wash traders have been…
