The non-fungible token industry continues to grow, though there are also signs of some less-than-desirable activity, according to a study by blockchain analytics platform Nansen.
The industry “continues to be targeted for certain profit-seeking practices,” Nansen warned, citing patterns in transactions that suggest token founders could be buying the floor for certain projects. That could be an indication of “wash trading,” a practice in which a trader or group of traders buy and sell the same asset to create the illusion of increased demand.
“While something appears to be amiss, it is definitely not incriminating evidence of money laundering, because they are not selling directly to each other,” Nansen analyst Ling Young Loon said in an email. “The wallets they eventually sell to may be related, but that would require much more rigorous study.”
Non-fungible tokens, or NFTs, have been gaining popularity with the rise of blockchain technology. They allow holders of digital art, collectibles, and all sorts of other items to keep track of ownership. Daily sales hit an all-time high earlier this month, according to data compiled by NonFungible Corp.
Even with the possibility of laundering operations, Nansen sees the overall NFT statistics as encouraging for the growth of the industry.
“NFTs are a bright new vertical,” the company’s report said. “The healthy distribution of NFT minters and the growing number of unique buyers point to genuine organic growth.”