The US Securities and Exchange Commission (SEC) is probing the non-fungible tokens (NFTs) market to find out whether its members violated securities law, Bloomberg has learned citing sources close to the matter.

The watchdog reportedly wants to find out if certain NFTs can represent ownership and, therefore, be used for funding like securities. The report notes that over the past several months, the SEC has sent subpoenas "demanding information about the token offerings."

The SEC is particularly interested in the so-called "fractional" NFTs, where tokens can be split into units and distributed between a group of investors. As of press time, the SEC made no official statement regarding the probe.

This is the first time the US financial regulator investigates NFTs as some say the market digital collectibles is full of money laundering schemes and scams. Chainalysis, a blockchain forensic firm, recently identified over 260 users who have sold an NFT to a self-financed address more than 25 times to artificially increase the price.

Statistics of NFT wash trades. Source: go.chainalysis.com
Statistics of NFT wash trades. Source: go.chainalysis.com

It seems that this practice isn't always working though as almost half of NFT wash traders have been unprofitable. The 110 profitable wash traders have collectively made nearly $8.9 million in profit from this activity, dwarfing the $416,984 in losses made by the 152 unprofitable wash traders, analysts at Chainalysis said.

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