With the growing popularity of NFTs, scammers have also jumped into the hype. Watch out for fake NFTs, rip-offs, dumps, and other common scams that plague the industry.
Looking back on 2012,”colored coinsThe first reference to what we now know as a non-fungible token (NFT – or “non-fungible token”). Ten years later, these blockchain-based assets, which can be pretty much anything, are all the rage, especially In the worlds of art, sports and video games.
The NFT market is starting to gain momentum in 2020, growing over 300% year-over-year, and moving digital currencies worth millions of dollars. However, in the first week of May 2022, sales of these tokens declined by 92% to 19,000 from its peak of 225,000 last September. The number of active wallets fell 88% to around 14,000 from 119,000 in November.
However, there are still thousands to millions of dollars of cryptocurrency circulating in the market, which gives scammers plenty of opportunities and raises huge concerns about the security of this asset. To steal a work of art, the thief had to pass through several barriers and cameras in the museum; Today, digital wallets can be hacked using malware or social engineering techniques.
When digital artist Qing Han passed away in 2020, scammers took advantage The virtue of the hour And they sold their artwork as NFTs on their behalf. In September of last year, the well-known graffiti artist’s Banksy website was hacked, displaying an advertisement for the sale of his first alleged NFT; One collector paid $336,000.
The lack of regulation of the NFT market makes it a place of opportunity for all types of businesses scam. Several companies such as some organizations, such as Adobe, are trying to develop “authentication stamps” that make it easier to verify the legality of a token. Despite some anti-fraud roadblocks, it’s a fast-moving space that relies heavily on user behavior.
Here are some common NFT scams that you should know and tips on how to avoid becoming a victim.
Direct messages on discord
Discord is practiced alone certain attraction It targets cyber criminals as it offers multiple ways to deceive users. The platform is divided into communities called servers where people can chat, stream, and play games together.
Last December alone, 373 members of Discord server powered by the recently launched NFT gaming marketplace Fractal had their digital wallet authentication credentials stolen, giving them Solana’s value. He lost $150,000.
Another discord scam method is to send direct messages (DMs) that trick users into thinking they are in fact being contacted by a brand, artist, or influencer. The larger the Discord network, the higher the chances of receiving scam messages. You should be careful when clicking on links sent by strangers or when receiving requests for money. Also, don’t get sucked into new NFT opportunities or projects without checking if the offer is legit.
Fake profiles on social networks
Users of social media, such as Twitter, Facebook & Co. -Constantly pay attention to potential fake profiles. Often these are copies of real profiles that can be recognized with a little care – sometimes one letter is enough to unearth the scammer.
At the same time, bots or criminals use social media to interact with users and request information or grant access to cryptocurrencies. While scammers are not always successful, a small percentage of successful robberies can mean big payouts.
In addition, cybercriminals can attempt to reach users by sending messages pretending to chat with them or asking for advice. Some “red flags” can be used to identify a scammer, such as for example the number of followers, the number of retweets and retweets, or whether the account is lacking original content.
Another popular tactic is to completely copy legitimate branded websites and apps. Fake NFT markets or cryptocurrencies are proliferating on Discord, Twitter, forums, and via email. The level of similarity to real companies is impressive, and small differences in URL or overall layout need to be kept an eye out.
For this reason, it is always important to check the URL of a link before clicking on it, especially if websites ask for personal information. We should always remember the golden rule and never share seed phrases or passwords with anyone outside of our NFT wallets.
Once the site is validated, the next step is to validate the NFT. Check the seller’s background and past sales, but also that the NFT is genuine and not sold on other markets, especially when buying expensive and on-demand crypto art. Speaking of suspiciously expensive and low prices, attention should always be drawn, as scammers tend to sell cheap copies.
Aside from Banksy and his story with the scam site, other artists have found themselves in similar situations. Tyler Hobbs, the artist behind the Art Blocks Fidenza project, denounced the SolBlocks platform for using the code to sell replicas of his work. Also, Derek Laufman’s artwork was being sold from a fake account under the artist’s name and I even received a “verified” code.
The list of similar scams is long, prompting artists to take action by commenting and publicly condemning fake profiles for illegal selling.
A “pump and dump” scam
This type of fraud, which is closest to NFT speculation, involves a person or group of people buying a large number of NFT (or cryptocurrencies) and selling them back to themselves to create an artificial feeling that the asset is in high demand. This increases resale profits.
A lot of these mega NFT “sales” are people selling it to themselves as part of a pump and dump scheme or money laundering scheme. https://t.co/s5QIIKhUL3
– Robert Evans (The Only Robert Evans) (IwriteOK) October 29, 2021
On the buy side, this pattern seems to be confirmed in parallel with influencers sharing NFTs on their profiles, making it look like a great opportunity. In the end, buyers expect to be able to resell at a higher price, which is almost never the case when scammers clean their tracks after receiving their money.
“Pull the rug” scam
A typical crypto scam has taken over the NFT market. Rug checks are very common and take advantage of their main advantage: by the time cheating is detected, it is usually too late.
As with the pump-and-dump scam, scammers promote a project, solicit investment, and then abandon it without warning. This usually happens when they think they have reached their maximum investor. Then they withdraw all funds from the NFT wallet and delete their profiles from marketplaces and social media.
One of the most well-known cases dates back to the “Squid Game” and the “Squid” cryptocurrency, inspired by the TV series. The value of that token skyrocketed to $2,800 in a matter of weeks until then He suddenly disappeared. All social media accounts and website disappeared without a trace. It is believed that the scammers stole $3.3 million this way.
Fake bids in NFT auctions are one of the most common scams. These occur when a real seller attempts to auction the NFT. While the seller will select the cryptocurrency they wish to pay in, the scammer can change their offer currency to one with a lower value.
Another way is to add and remove the market NFT display, shifting one decimal point to the right. Without the buyer noticing the change, they may end up paying much more than they originally had in mind. Just like in real life, you have to look closely at the price before you pay.
Acquisition of accounts on social networking sites
Fake offers and gifts are a good way to get users interested (not only) on social media. Surprisingly, it can come from well-established user accounts. However, the truth is that many times these accounts have been taken over by scammers promoting fraudulent offers.
Our discord has been hacked, don’t click on any links, don’t click.
Threats have been removed, however, we will continue to monitor the server until it is completely secure.
Please remember to check each ad twice and thrice.
– Lazy Lions 🦁👑 (LazyLionsNFT) May 18, 2022
Once users try to access the fake offer, they are prompted to enter their passwords or personal information, thus exposing their details and ending up with nothing.
In these scams, scammers record NFTs on the wallets of influencers, making it appear that the celebrities have “printed” the NFTs on the blockchain. This is because many buyers monitor certain portfolios for new activity to discover mass interest and increase the value of the NFT.
These scams incorporate elements of most of the techniques listed above, including artist impersonations and pump-and-dump scams. annoying open cthe largest NFT marketplace, over 80% of the NFTs generated for free on their platform were fake, stolen by other artists, or just plain spam.
86,000 times people have stolen my art and listed it @employee And they even had the audacity to make a bunch like a giant middle finger to my intellectual property rights. What is this nonsense?#nft # art # to open # Violations #nftcommunity pic.twitter.com/LY5Jxb2N2r
– Aja Trier (AjaArt) January 5, 2022
NFT Safety Tips
There are many scams to beware of when venturing into the NFT world and as always, scammers never miss a golden opportunity to make money. So it’s important to stay alert at all times – a healthy dose of skepticism will save you some headaches down the road.
Here are some quick tips on how to stay safe when using NFTs:
- Never share your private key or seed phrase with anyone.
- Use strong, unique passwords along with multi-factor authentication whenever available.
- Always make sure that the direct message you received is correct.
- Never click on a link that promises free services or requires you to respond quickly. And if you are inclined to do so, first check the origin of the link. This applies more to Discord.
- Store your tokens in a cold storage hardware wallet instead of a software wallet (also known as a “hot wallet”).
Do you have any questions or suggestions about this topic, or other or future topics you would like to consider? Then feel free to use or use the comment function within this article Our contact form!