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It is reported that someone was copying the trades of a noted NFT trader. This noted NFT trader profited from this by making an inflated bids on one of his own NFTs, and when the copycat replicated the trades on other NFTs they were purchased for ~10 times the usual rate.

The copycat (ThinkingETH) has since described the loss as "stolen funds", and someone said:

I unironically think @ThinkingETH might have good legal claims to get their ETH back from the bot 'trick' if they hire a skilled litigator. Legally the issues are a bit more nuanced than they might be normatively from the standpoint of cryptotwitter.

Is there a case here? Is there some nuanced issues that could mean that the seller is responsible for the seller to have "stolen" from the buyer? Is there a civil case to be made that the funds should be returned? Any jurisdiction would be interesting, as it seems to matter little where these events occur.

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  • I don't know for sure but would the insider-trading tag be appropriate here?
    – user35069
    Aug 8, 2023 at 20:02
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    @Rick This falls short of insider trading. The NFT trader simply took advantage of a pattern he noticed: other's propensity to replicate trades (or bids) regardless of the price. Aug 8, 2023 at 20:13
  • @IñakiViggers I don't know for sure, but could there some breach of the selling platform's T&Cs for shill bbidding? -(According to that link it's actually unlawful in the UK)
    – user35069
    Aug 8, 2023 at 20:26
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    @Rick NFTs are not stocks, certificates, or currency and often unregulated.
    – Trish
    Aug 8, 2023 at 20:41
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    @Rick It would be interesting to see the applicable statutory definition of shill bidding. But the pattern of blindly copying that agent's trades suggests that the price was de facto irrelevant to the copycat. Aug 8, 2023 at 20:43

1 Answer 1

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This type of fraud is called shill bidding

Unless the rules of the auction allow it, a vendor is not permitted to bid on their own item. Even when they are, such vendor bids may be disclosed.

The relevant laws date from well before the rise of online auctions but they are just as applicable. There have been successful prosecutions to my knowledge, including jail time, in the USA and the UK. A quick Google search shows these are not unique.

A victim of such a fraud can seek restitution through a civil claim.

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  • Does the fact that his inflated bid was the winning bid (that is, he didn't bid on his own product, he bought it) make any difference? Aug 9, 2023 at 21:48
  • @RyanJensen: Good question. I sell one expensive computer on eBay. I put in a high bid to convince others that the computer is very valuable, and to make sure they cannot get it cheap. That's shill bidding. Now I sell two expensive computers on eBay. I buy one with a very high bid but don't touch the second one.
    – gnasher729
    Aug 9, 2023 at 23:48

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