Jim Chanos Says NFT Market Is Rife With ‘Nefarious Activity’
(Bloomberg) -- The NFT market is rife with “nefarious activity” and conflicts of interest, short-seller Jim Chanos said.
“What I worry about is that affiliated parties are setting prices for some of these NFTs at auctions, or at so-called sales, with themselves in effect,” Chanos, founder of Kynikos Associates, said at the FT Live Conference Thursday.
NFTs have soared in popularity this year, with high-profile transactions like the $69.3 million purchase of a Beeple artwork. Daily NFT sales peaked at $268 million in late August, according NonFungible, a tracker of digital certificates that serve as proof of ownership of an asset.
Traders can set a false, inflated market price and then issue another set of NFTs at a supposed big discount for the public to buy, Chanos said. “So they can get in on the 10-fold increase that they just manufactured. This is as old as markets. This is wash trading,” he said.
Still, regulating cryptocurrencies will be difficult, he added.
Among his other comments:
- The China Evergrande Group crisis is evidence of the growing risks that the country’s economic model poses for Western investors.
- “Fundamental short selling is about as out of favor as it possibly can be,” he said. “Nobody wants to consider it. No one thinks that there’s much corporate risk on the downside.”
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