The U.S. Commodity Futures Trading Commission (CFTC) fined a group of pump-and-dumpers $7 million in August 2019 for their role in the illegal "wash trading" practice, which artificially enhanced the price of NFTs.

According to a new study by blockchain data firm Chainalysis, some NFT traders are “making a killing” by engaging in wash trading, which involves the seller being on both sides of the NFT trade, resulting in asset value inflation that is misleading. Wash trading is problematic, according to the news, with cryptocurrency exchanges where trade volumes are falsified to make them appear larger.

“The objective of NFT wash trading would be to make one's NFT seem more valuable than it is by selling it to a new wallet that the original owner also controls,” according to Chainalysis.

The platform tracked NFT washing by analyzing sales of NFTs funded in some manner by the selling address. According to the SEC, some NFT sellers have conducted hundreds of wash trades. According to one of the most prolific NFT wash traders, 830 transactions were made to self-financed addresses.

According to the study, "262 users have sold an NFT to a self-financed address more than 25 times," which was accomplished using blockchain analysis. “While we can't be certain that all NFT sales to self-financed wallets are intended for wash trading, the 25-transaction threshold provides us a greater degree of certainty.”

Not every wash trader is successful because of the gas costs associated with transactions, according to Chainalysis, which discovered 110 profitable wash traders who have collectively made approximately $8.9 million USD — likely from buyers who were unaware that the NFT they purchased had been artificially inflated in value. Chainalysis released its first-ever report on crypto crime, which was based on an analysis of over one million stolen Ethereum addresses during the past year. The company compared this data to previous reports and found that in 2021, there was an all-time high of $19 billion USD worth of cryptocurrency theft worldwide.