[arcticbull]

> Wash trading is a process whereby a trader buys and sells a security for the express purpose of feeding misleading information to the market. In some situations, wash trades are executed by a trader and a broker who are colluding with each other, and other times wash trades are executed by investors acting as both the buyer and the seller of the security. Wash trading is illegal under U.S. law, and the IRS bars taxpayers from deducting losses that result from wash trades from their taxable income. [1]

Whew, good thing it's not a security, otherwise it would 100% absolutely be a half billion dollar illegal wash trade, and that kind of stuff comes with time in the big house. IANAL, but stunts, amirite?

[1] https://www.investopedia.com/terms/w/washtrading.asp

[throaway6942]

We can't apply 1:1 laws to crypto precisely because of this.

I can write a piece of code in a few minutes for all the collection I own, does not make it wash trading. In fact, you can very easily check it on etherscan or similar tools that this was a flash loan.

[arcticbull]

> We can't apply 1:1 laws to crypto precisely because of this.

I think in a lot of cases that's simply wishful thinking. They Howey test is actually a very good fit in the crypto space broadly, especially alongside the guidance from the SEC on how to interpret it with respect to digital assets. [1] Most tokens are just straight-up securities, what we're lacking isn't regulation but enforcement.

NFTs are likely not securities as they fail the Howey test. [2] Fractionalized NFTs, however, probably are securities.

> I can write a piece of code in a few minutes for all the collection I own, does not make it wash trading.

It's still wash trading, of course, it may not be a crime because it's not done against a security as I mentioned.

IMO it could be some other kind of fraud or civil matter already as you're enticing a purchase on the basis of intentionally misrepresenting past trades. If not, I agree, this might be a good area for some additional regulation, either here or in markets broadly (I'm looking at you, art and collectibles).

[1] https://www.sec.gov/files/dlt-framework.pdf

[2] https://clsbluesky.law.columbia.edu/2021/03/19/latham-watkin...

[Animats]

NFTs are likely not securities as they fail the Howey test.

NFTs for things that already exist are likely not securities. But NFTs for things that don't exist yet, such as as virtual land in un-implemented virtual worlds, do pass the Howey Test. You're funding the development of something, not buying something that already exists. That's an investment. At some point, probably after the first widely publicized collapse, the SEC will shut many of the future-oriented NFTs down, much as they did to the ICOs starting in 2018.

Virtual land in vaporware virtual worlds is the same scam as selling undeveloped swampland in Florida, a popular scam in the 1950s.[1] There are few new scams. It's mostly the same old ones with new shiny packaging. Most of them are listed in Extraordinary Popular Delusions and the Madness of Crowds, from 1841.

[1] https://en.wikipedia.org/wiki/Swampland_in_Florida

[arcticbull]

Good point, that would rely on the efforts of others, yeah?

[TomSwirly]

> We can't apply 1:1 laws to crypto precisely because of this.

Why do you think the rule against wash trading is there?

Because people systematically manipulated markets with it.

> I can write a piece of code in a few minutes for all the collection I own, does not make it wash trading.

Your argument is, "I can do this really fast, therefore it's not criminal"?

[throaway6942]

No, my argument is that someone like me can easily verify that this was a wash trade.

In fact, marketplaces have already started to flag these transactions[1].

[1] https://larvalabs.com/cryptopunks/details/3100