Market Manipulation in NFT Markets

Sebeom Oh

MPRA Paper from University Library of Munich, Germany

Abstract: Non-Fungible Tokens (NFTs) are a new form of digital asset used for fundraising purposes, similar to equity crowdfunding, but within an unregulated environment. The NFT market has been described as an unregulated and prone to misconduct, but there is a lack of detailed analysis on such behaviors. This paper examines the use of manipulative trading, specifically unrevealed insider trading and wash trading, within the NFT market using publicly available transaction data on the Ethereum blockchain. The results show that insiders buying behavior strongly predicts higher future price returns. Even if the circulated USD amount in wash trades is more than 422 million, wash trades fails to impact meaningful market outcomes. I find that some investors engage in wash trading to earn rewards from NFT marketplaces or promote emerging marketplaces in competition with the dominant platform.

Keywords: Blockchain; NFT; Manipulative Trading; Insider Trading; Wash Trading (search for similar items in EconPapers)
JEL-codes: G14 G28 (search for similar items in EconPapers)
Date: 2023-03-22
New Economics Papers: this item is included in nep-fmk, nep-mst and nep-pay
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https://mpra.ub.uni-muenchen.de/116704/1/MPRA_paper_116704.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/117531/1/Draft_NFT_Market_Manipulation.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/117629/1/Draft_NFT_Market_Manipulation.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:116704

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