NFTs abound, as do scams. Here’s how to keep away of them.
We’ll focus on NFT scams in today’s article so you don’t lose your digital collectible before generating any money.
In recent months, non-fungible tokens, or NFTs, have sold in the millions of dollars. Whether it was Jack Dorsey’s tweet, which sold for $2.3 million, or a dog’s photo, which sold for almost $4.3 million. Whether you agree with the concept of NFTs or not, digital treasures in the form of art, GIFs, films, music, and other assets cannot be overlooked. NFTs, on the other hand, are not immune to fraud. Every day, it appears that an NFT collector is either scammed or the victim of theft.
Scams from the beginning
In the world of NFTs, traditional rug pulls are extremely frequent. A collection of 10,000 “Evolved Apes” went live on the OpenSea NFT marketplace in October 2021. “A collection of 10,000 distinct NFTs locked inside a lawless world,” the NFT project described itself. It stated that they are “fighting for existence, and only the strongest ape will prevail,” referring to the project’s much-hyped fighting game, which has yet to be released. The initial purpose of the NFT offering was to raise funds for the development of an NFT-based game.
The developer, however, vanished with 798 Ether (about $2.7 million at the time) a week after the project was released. There will apparently be no Evolved Apes game, and individuals who purchased NFTs now have nothing more than a JPG file to show for their money.
Rug pulls are fairly prevalent, as evidenced by the recent example of SQUID token, which was inspired by the hit South Korean sitcom Squid Game. The developers dumped $3.3 million (approximately Rs 22 crore) in cryptocurrencies on the entire community. In just a few days, the company’s social media accounts and website were deactivated.
Scammers frequently use social media to do their business. They frequently contact people via direct messages, acting as dealers or buyers of persons and promising false freebies. They get access to your crypto wallet and subsequently your funds in exchange.
The latest threat to NFT purchasers is discord hacking. Fractal, a newly formed gaming NFT marketplace, had its Discord service hacked, defrauding 373 of its members out of a total of 800 in Solana cryptocurrency valued $150,000.
Scammers are waiting for the proper opportunity to strike. CryptoBatz, the NFT collection of pop culture legend Ozzy Osbourne, went live recently. On January 20, a batch of 9,666 digital bats known as “CryptoBatz” went on sale. After clicking on a link given by the project’s official Twitter account, Osborne’s supporters came to Twitter to protest about a phishing scheme that was draining cryptocurrency from their wallets.
The NFT project updated this link, and cyber thieves took advantage of it by setting up a fake Discord server at the old URL. The followers were sent to a bogus Discord panel and asked to authenticate their crypto assets, pushing them to connect their cryptocurrency wallets, after they followed the fraudulent link. A total of 1,330 persons came to see the phoney NFT project.
NFT collectors have lost a lot of money as a result of malicious link frauds. Todd Kramer of New York said he had an NFT collection of 16 Bored Ape Yacht Club (BAYC) valued $2.28 million (about Rs 16.94 crore) but had been phished by an NFT DApp. He tweeted about his ordeal, saying he had clicked on a link that appeared to be a legitimate NFT DApp (decentralised application). It turned out, however, to be a phishing scam, and his whole collection was stolen.
Stay Safe
Because NFT is a continually evolving arena, if you are a newcomer or even if you are familiar with it, here are some crucial recommendations to help you avoid being taken advantage of.
Before you list your NFTs, make sure you check the marketplace first. Several marketplaces advertise low gas fees (transaction fees for uploading your NFTs) and even claim to rank your NFTs on their homepage in exchange for connecting your crypto wallet.
It’s game over once you’ve done that. Trade NFTs only on reputable exchanges like as Rarible, Foundation, and OpenSea. If a DApp purports to be an NFT marketplace, do not download it.
Understand that your cryptocurrency wallets—where your crypto tokens and NFTs are stored—are being hacked, therefore avoid clicking on any links, as they may lead to bogus trading sites. Never reveal your seed phrase (recovery phrase) with anyone who has access to your wallet credentials.
Keep an eye out for phoney gifts. Although real platforms frequently offer free NFT freebies as part of their marketing campaigns, make sure they are genuine. If anything appears to be too wonderful to be true, it is most likely a fake. To determine whether or not an NFT website is secure, you can utilise free software such as Trend Micro.
Purchase from a verified vendor; most genuine NFT sellers will have a blue checkmark below their usernames, and the collection’s attributes will be plainly mentioned. Avoid romance scammers, who will try to persuade you to invest in some NFT projects. They may even email you links to bogus NFT websites or request that you send them money. Take care.