Exchange trading accounted for 58% of NFT trading on Ethereum in 2022.

According to a recent report from Dune Analytics, confidence in the non-fungible token market has been hit hard. In the course of its report, the analytics firm found that a huge proportion of the transactions were fraudulent.

In particular, the firm found that more than half, or 58%, of the transactions were described as “laundering trades.” This form of trading refers to the manipulation of the market, where the buyer and seller cooperate, causing prices to go up/down.

Of course, expanding this figure, we find that 58% is the average percentage of transactions. In the worst case (January 2022), over 80% of transactions were fictitious.

To put this into perspective, that 58% of fictitious trading is over $30 billion — a relative drop in the ocean of crypto transactions — but that’s not something to simply dismiss.

These figures make one wonder how this level of fictitious trading was possible. Dune researchers found that there are four elements that can be looked at to indicate odd trading behavior indicative of Wash trades.

First, the most likely suspects would be transactions between the same wallet addresses. Secondly, the exchange of the same NFTs back and forth, which was the most common activity.

Third, multiple transactions of the same NFT were flagged as a bogus trade due to the rarity of such an action. Last but not least, along with similar wallets, if these wallets were funded by the same wallet, there would be a clear correlation.

Even though this activity is completely illegal, it is still difficult to control in the crypto/NFT space.