Yuga Labs recently brought a new CEO to head the company and its collections such as Bored Ape Yacht Club (BAYC) and CryptoPunks. Daniel Alegre formerly worked as President and Chief Operating Officer of Activision Blizzard and was largely responsible for helping to shape the games we know and love today. With his arrival, Yuga Labs has set the NFT industry abuzz, hinting that the “metaverse” could be just around the corner.

NFTs are all about taking ownership of digital assets within the blockchain. And just like any other purchase, buyers should be wary of certain pitfalls. Recently, a survey from 4 out of 10 showcased that cryptocurrency use was on the rise, except is also showed that NFTs could be deceivingly fake. Wash trading - a sort of stock accounting fraud - was found to be a major culprit.

So how can you spot the signs of wash trading when it comes to NFTs? Economist Avinash D. Persaud, author of the paper titled “Shedding Light on Price Formation in the Dark Pools”, suggest that when transactions are repeated, it stands to reason that the “price” of a given item has been artificially inflated, which could be a sign of wash trading.

Alex Lightman, co-founder of blockchain startup Tokenized, adds to this sentiment. Lightman notes that when a new NFT enters the market, the purchaser should be suspicious of a blocked account if the digital asset increases in value at an unsustainable rate.

No one wants to get stuck buying something that isn’t real. To avoid being scammed or acquiring fake NFTs, it is important to be diligent in understanding the market, researching the suppliers, and double-checking their credentials. The more attention you pay to the sources of your purchases and to the NFTs themselves, the easier it will be to spot the signs of wash trading.

Yuga Labs is a pioneering company operating in the NFT industry. News of its former Activision Blizzard executive, Daniel Alegre, joining the firm as CEO is helping to generate buzz around NFTs and the metaverse. Unfortunately, it also puts buyers at risk of falling for a wash trading scam. It’s important for potential NFT investors to be aware of the signs of wash trading, researching the supplier and double-checking credentials before making any purchases. This will equip them with the knowledge necessary to avoid fake sales and make informed decisions.



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