Non-fungible Tokens - Exploring Suspicious Washtrader Communities in NFT Networks

Non-fungible Tokens (NFTs) have received increased attention since 2021. NFTs can be susceptible to fraudulent activities such as washtrading or trading of counterfeit digital assets. Such behaviors threaten the trust in this new trading space and for this reason, NFT skeptics are suspicious of the true values of highly priced digital assets. In this paper, we propose a two-step methodological approach to identify washtraded assets, and the suspicious communities of washtraders. Our approach uses bipartite graph characteristics to provide an efficient algorithm that does not require computationally intensive methods. We also identify the challenges in this stream of research and propose suggestions to address those challenges. Our method demonstrates practical applicability on real life networks of NFT transactions and opens doors for several future directions for investigating and exploring the communities of suspicious washtrading actors.