  Wash trading is a form of market manipulation where the same entity sells an
asset to themselves to drive up market prices, launder money under the cover of
a legitimate transaction, or claim a tax loss without losing ownership of an
asset. Although the practice is illegal with traditional assets, lack of
supervision in the non-fungible token market enables criminals to wash trade
and scam unsuspecting buyers while operating under regulators radar. AnChain.AI
designed an algorithm that flags transactions within an NFT collection history
as wash trades when a wallet repurchases a token within 30 days of previously
selling it. The algorithm also identifies intermediate transactions within a
wash trade cycle. Testing on 7 popular NFT collections reveals that on average,
0.14% of transactions, 0.11% of wallets, and 0.16% of tokens in each collection
are involved in wash trading. These wash trades generate an overall total price
manipulation, sales, and repurchase profit of \$900K, \$1.1M, and negative
\$1.6M respectively. The results draw attention to the prevalent market
manipulation taking place and inform unsuspecting buyers which tokens and
sellers may be involved in criminal activity.
