It’s an occurrence that sends shivers down the spine of any crypto investor and one that has recently become all too familiar in the world of Non-Fungible Tokens (NFTs). Riley, a budding NFT investor, had recently become interested in CryptoPunks, a series of digital collectibles released on the Ethereum blockchain in 2017.
After acquiring several CryptoPunks, Riley decided to try and leverage them to raise money. Unfortunately, wrapping NFTs for use as collateral was unfamiliar to Riley and one that ultimately ended in disaster.
Investor Loses $2,800 After Sending an NFT to a Burn Address by Mistake
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Recently, Brandon Riley acquired a CryptoPunk #685, an NFT from the CryptoPunk collection, for 77 ETH, which he planned to keep for a lengthy period. However, Riley accidentally sent it to a burn address when he decided to exchange it for cash, meaning the NFTs were permanently obliterated.
Riley’s attempt to take advantage of obtaining new NFTs before a new crypto bull backfired. He said, “I intended to keep the asset permanently, as the number was the opposite of my ape. I was only transferring it to gain some liquidity.”
The NFT collector said he had learned a bitter lesson for not seeking help when needed. Additionally, Crypto Twitter attributed the investor’s loss to hard-to-understand user interfaces and complicated instructions.
This prompted the crypto community to reach a consensus on the necessity of modernizing the front-end procedures of crypto ecosystems.
Wash Trading For NFTs Rose By 126% Last Month – Coingecko Report
Meanwhile, a CoinGecko report has confirmed that wash trading for NFTs rose by 126% in February. According to the report, X2Y2, LooksRare, and Blur recorded an increase in wash trading for the fourth consecutive month, amounting to a total volume of $580 million.
Wash trading involves misrepresenting the actual trading activity by carrying out multiple trades of the same asset at the same price. This is achievable by manipulating the price or the amount of trading volume.
Certain exchanges have, in the past, offered incentives to participants who generate a larger trading volume. According to the CoinGecko report in February, wash trading accounted for about 23.4% of the “unadjusted trading volume” on the top six NFT marketplaces.
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Although illegal in the traditional financial market, no regulation prevents instances like this one from happening with NFTs and in the broader crypto market. In January, investor Mark Cuban predicted that wash trading could result in an “implosion” for the cryptocurrency market.