Scam works by having an auction house collude with a grading company. The founders stock up on goods to be the subject of a speculation bubble. Then the auction house and grading company launder legitimacy through aggressive marketing. Friends of the founders are given extremely high grades while other products are given fair grades while collecting fees. The auction house then sells goods graded by the partner grading company. The auction house then goes and sells copies of goods to itself to market the increasing value of goods (so people will sell through them, collecting fees again.)

Speculation: People buying goods solely on the hope it raises in value.

Slabbing: grading companies sealing appraised goods in containers so they can be traded as-is.

Actors

Speculators: the people buying goods to hold until it raises.

Grading companies: companies which perform quality assurance, sealing and certifying.

Auction companies: the companies which facilitate transactions.

Values of a Collectible

Intrinsic value: composition and quality of the collectible.

Extrinsic value: intangibles, value solely from rarity or the history of the object.

History

Heritage Auctions only selling video games certified by Wata who at the time had no history of verifying authenticity.

CEO of auction house buying a game and immediately doing a press release that he will be selling it soon

Consent laundering by marketing Wata games and the auction house on Pawn Stars to appear legitimate.

Auction firms start hiding who the goods have been sold to which prevents people from noticing that vendors are selling to themselves.

Wata saying employees may not have games graded but a director (as labeled by SEC forms) is doing exactly that.