Incentives & Wash Trading AMA ReCap

For those of you who missed our Reddit AMA on Thursday September 15, 2022, here’s a recap of the Introduction, Questions and Answers.

Introduction

Good Afternoon everyone and welcome to our Reddit AMA on

Trading Guidelines and Policies for our Incentives Program.

I’m Michelle the Head of Marketing and I will be your host for the next hour.

Joining me today are Vincent Geneste, CEO of GhostMarket u/financeforgeek and members of GhostMarket’s legal team from Growin Portugal u/growinportugal.

The format of today’s AMA will be in two parts:

Part 1. Discussion

I will ask our legal team some questions regarding our incentives program and particularly the guidelines and rules around ‘Wash Trading’ and they will provide our community with their responses.

Part 2. Community Questions

We will open up for community questions to seek clarification on the issues raised during Part 1 and will answer as many questions as we can during the 1 hour allocated.

What we WON’T be doing

We will not address individual wallet issues during this AMA.

That means you can not say “I got banned/flagged, how do I get unbanned?” or “I got banned, what did I do?”

Individual answers to those types of questions can only be addressed within our ‘ticket’ system in our Discord server. If you have not joined Discord, then please follow this link to join and open a ticket, so that your individual issue can be investigated.

https://discord.gg/THHTS4F

Next week, we will be publishing a Medium article outlining the broad Q&A from today’s discussion for you to refer back too. So look out for it.

Part 1

Ok, let’s get started with Part 1.

Vincent would you like to start by saying a few things about our Trading Incentives Program as a lead in to the legalities of the system and wash trading in particular?

Vincent
Hey guys sorry for the rough start, small glitch :)

Our Incentives Trading Scheme has been very popular since we launched it back in July. Obviously with popularity comes some tweaks to the system that needed to be made to ensure it runs smoothly.
As indicated in our Medium article from launch (here is the link if you missed it https://gmio.info/Medium-TradingIncentivesProgram).

We have initially allocated 6.5 million tokens for the first year of the incentives program. The more you trade on GhostMarket, the more $GM you will receive from this amount.

Additionally, an extra 1.8 million tokens has also been allocated to OG users. With more programs to be unveiled in the future as well.
Tokens are allocated to buyers and sellers based on their volume during the current day versus the global platform volume.. We manually do this, as a backup to ensure that users (and wallets) are given the correct amount of tokens and that they have been acting within the spirit and legalities of the program.

So far, we have already distributed 3.5M (including the OG allocation, except for Phantasma).

Initially the system seemed to be working fine, but then we started noticing that some people were undertaking, what is generally described in the Industry as, ‘wash trading’.

After a number of questions from users we began to investigate some transactions and found some irregularities.

From that we developed a wash trading policy and that is now the system within which we will operate.

GhostMarket.io adheres to the highest compliance, security, and data protection standards. Therefore, as a Company we strive to ensure fairness and maintain users’ confidence and trust, prohibiting any practice that jeopardises this integrity.

We are against any sort of manipulation techniques in which the user carries out several fictitious transactions, normally acting on both sides of the business, as a buyer and as a seller (or in combination with another entity) benefiting from the action without any change of the economic beneficiary of the transaction.

Michelle

Thanks Vincent. So u/GrowINPortugal, talk to us about what the legal definitions of wash trading is?

GrowInPortugal

Thanks Michelle and Hi everyone, good to be here.

Wash Trading is, by definition, a tactic that users adopt to make profits and game the system. This illegal activity involves buying and selling the same asset at once to create artificial transactions on the market. Wash Trading can also relate to any operation with or without the user’s intention to manipulate the user-generated assets in GhostMarket. These operations may provide false or misleading signals and/or assure or attempt to secure asset prices in the marketplace.

Furthermore, no evidence of intent or state of mind of the participant(s) is required. Therefore, it is not necessary to show that the participant(s) knew they were infringing the rules of use of the marketplace. As such, any action carried out with the sole intention of manipulating the assets will be prohibited on the platform

Michelle

OK, so what types of activities can be defined as ‘wash trading’?

GrowInPortugal

Any action carried out with the sole intention of manipulating the assets will be prohibited on the GhostMarket platform. This can include the following (but are not limited to just these things):

• Fictitious Transactions: This is the practice that consists of carrying out transactions in which there is no change in the economic beneficiary of the financial instrument transacted. For instance, when a user carries out multiple transactions between wallets to increase sales volume and earn the transactions-based rewards on the platform.
• Illusionary Transactions: Is the practice of creating the illusion that a particular asset has gone up in value for the sole purpose of benefiting from the transaction at a lower price and earning volume-based rewards on the platform.
• Manipulated Transactions: Which is the practice of encouraging buyers to raise prices or sellers to lower prices with the sole objective of benefiting from the fluctuations in prices and engaging in wash trading-related activities.

and

• Repeat Transaction: This practice consists of buying and selling the same asset several times in a short period of time through different accounts belonging directly or indirectly to the same person or entity to attempt to profit from the difference in prices.

Now these aren’t all the ways you can do it, but most wash trades can fall into one of these four transactions.

Michelle

So what measures can be implemented to detect wash trading?

GrowInPortugal

As part of the Company’s efforts to combat Wash Trading, it has implemented a set of preventive measures that includes but is not limited to the following:

• Activity Monitoring: The Company is monitoring all activities and transactions within GhostMarket.io as part of the ongoing and continuous efforts to ensure the platform’s integrity and identify any suspicious activity.
• Random Checks: The Company, and as part of its efforts to prevent such wrongdoings, the platform will be analyzing and monitoring transactions and could conduct random checks on any unusual activities that might be linked to an attempt of “Wash Trading”.
• Suspicious Activity Alerts: The Company has implemented an algorithm to detect suspicious activities that might directly or indirectly qualify as “Wash Trading” using various parameters and detection mechanisms.
• Wash Trading Notice: GhostMarket has published and will regularly update the present Wash Trading Notice to ensure that users fully understand that such practices are prohibited and that they might lead to Corrective Measures as stipulated in the paragraph below.
• Awareness Campaigns: The Company is maintaining a communication policy across all its social media channels and newsletter to raise awareness amongst users and remind them of the importance of full compliance with the present Wash Trading Notice.

This AMA today is part of that awareness campaign.

Michelle

Thanks u/GrowINPortugal.

For those of you who have not seen it, a link to the ‘Wash Trade policy’ is on the Incentives Trading page, but you can also go directly to it via this link:

GhostMarket * Sell, Explore, Buy and Create Collectibles

So Vincent, what sort of ways will GhostMarket use to address the issue of wash trading?

Vincent

We want to adhere to the highest compliance standards we can. Whenever there is any suspicious event involving ‘wash trading’, in the ways described by GrowIn previously, we will take immediate actions that includes the following:

• We will investigate the incident.

GhostMarket will open an investigation to establish the facts surrounding any activity that qualifies as suspectful of falling under Wash Trading

• Implement Bans.

We will ban the user(s) suspected of being involved in any wash trading activities based on any wrong-doings or activities that might qualify as Wash Trading. This ban is permanent and cannot be appealed.

• Report Banned Users:

We will identify and might report the user(s) involved in Wash Trading activities to the authorities.

Michelle

A few quick, final questions before we open up to the community Vincent.

Does a user need to (or can they) provide information to stop them getting banned if they are flagged by the GhostMarket system?

Vincent

Sure, they can just open a ticket in the Discord Server.

Michelle

Is GhostMarket wanting other users to notify you of incidents where they think wash trading has occurred?

Vincent

Yes, again, just open a ticket in Discord.

Michelle

What happens to the NFTs in a wallet that is banned?

Vincent

In the first instance we don’t ban people. We flag their wallet. This just means that they can’t claim rewards anymore.

If it’s a very serious abuse (eg: abusing incentives through stolen art), we can ban on top of flagging that wallet. Doing that means all the NFTs belonging to the address banned, effectively disappear from the platform.

Michelle

If my wallet is banned on GhostMarket, does that mean I can’t use my wallet anymore?

Vincent

See answer above, those are two separate things.

Michelle

Does the amount of wash trading jeopardize the ongoing nature of the incentives program?

Vincent

Not in the slightest. The incentives program is made to generate volume, which is what is happening, and to distribute the supply to GhostMarket’s traders, which is the case too.

Part 2

Michelle

Thanks Vincent and Growin for those great answers to my questions explaining wash trading and what GhostMarket is doing about it.

I am going to open the chat now to questions from our community. Depending on the number we get, we may not be able to answer all of them today.

Can I ask you to please initially keep it to one major question and a reminder that we like to keep the discussion respectful for the benefit of everyone?

Community Questions were then answered by GhostMarket CEO Vincent Geneste.

Q: Is the GhostMarket wash trading policy similar to other projects? Is there an industry standard?
A: As far as I’m aware there’s no equivalent on other places with similar program, it’s kinda unique. Note that wash trading is an Inherent part of crypto sphere, we can’t prevent it. But we can improve the framework around it.

Q: With the Trading Incentives Program users get GM for buy or sell NFT’s but this may cause negative impact on its price . Will there be any buyback or burn of GM token in future ?
A: Not really , it’s quite the opposite actually we’ve seen lots more of volume , Including buys of the tokens , as ppl want the ability to buy / sell in GM. We won’t have any buyback at least not short term because 1) or most of the time make a currency a security which we don’t want and 2) as we’re still slowly releasing our supply it makes no sense to burn while the full supply isn’t even there.

Q: How will you detect (a person performing wash trading ) if a same person uses 5/10 wallets for the reward ?
A: We have algorithms in place and are also in the process of adding more tools to detect that. There are a lot of ways to detect wash trading patterns and we’re very familiar with the subject.

Q: Hello.i am wondering about something. How about some project which has their own project and own clients. For example: metaverse 3d meeting tickets or shopping stuff with NFT. The project managers attract to new people and they come over our marketplace and buy their favorite nfts. New users come over and buy. It doesn’t mean that manipulation or wash trading right. Coz it is marketplace right?
A: That sounds fair to me.

Q: Will that system every become automated ? I understand the purpose of doing it manually right now as it assures fairness, but I am thinking long term, when there will be more and more users. Will you guys hire more people to do it by hand, or will it be somehow automated ?
A: It already is automated. What’s manual is reviewing ppl asking us to review.

Thanks to everyone who joined our AMA on Reddit.

The direct link to the post can be found here:

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