NFT Scams – Latest Financial Instruments To Be Abused By Scammers
Non-fungible tokens, or better known as NFTs, are a convenient way for artists and other groups of creators to sell their art for thousands and sometimes even millions of dollars online.
These creations could be drawings, music or similar, even gifs, for example. With their spiraling popularity, NFTs have given content creators a lucrative chance to earn off their creativity and talent.
However, with that, these relatively newly discovered products for online trading have also attracted the attention of scammers. People who are looking for a way to earn profit often intend to swindle investors and trick them into participating in their scheme.
When the defrauded realize they’ve fallen victim to a sham, it’s usually already too late. We highly recommend you to read this article before you engage in trading these versatile assets and falling for NFT frauds.
Most Common NFT Scams
The majority of these fraudulent actions revolve around stealing investments, selling counterfeit products or gaining access to the victims’ capital.
The key to avoiding these sophisticated financial traps is knowing how to recognize them. The following part of our article focuses on decoding the most present types of NFT schemes.
Before buying any product you’ve set your sights on, it’s crucial to make sure it is being sold by the very artist that has produced it. It has become a common occurrence to encounter NFT art scams on reputable marketplaces or lower-priced duplicates of original products on fake markets.
Fraudsters often want to try and present the stolen work as their own. In order to cover their tracks they also tend to somewhat alter the product by slightly changing any of its original features.
That doesn’t make the crime any less serious, however, and you should choose carefully who you buy anything from.
Rug Pull Schemes
Fake hype always helps promote the product more efficiently and gain interest of the potential buyers. Fraudulent NFT schemes often have powerful marketing campaigns, advertised across a wide range of social profiles.
The price of the NFT is usually high when it’s being sold. After enough victims buy the product, the swindlers can disappear without leaving a single trace behind.
After a sudden buying wave, the price of the product drops. Soon the owners of the asset are left with a worthless token, without a chance to sell it.
Pump and Dump Projects
Groups of swindlers can sometimes pick a product and then artificially inflate its price by massively buying it and driving its value up.
Then they engage in promoting this particular asset via various social media and apps to create an illusion of its value.
This motivates investors to buy the particular NFT. Once the price sky-rockets, cyber criminals sell their portion of the asset, thus driving it’s price down. The investors are left with a product of practically no value and the thieves get away with the money.
Fake NFT Websites
What better way to have a whole bunch of investors come directly to the scammer than creating a whole trading ecosystem! In this type of scheme, the perpetrators create websites that are just slightly different from the most frequented sites for trading NFTs.
For example, one of the most popular NFT marketplaces is niftygateway.com. The cyber criminals can copy the site layout and create a domain that is similarly named but ends with .co or .io.
The unsuspecting victim doesn’t pay particular attention and gives scammers a way to their wallet by inputting their sensitive information on the fake web page.
Sometimes, the artists selling their work in the form of NFT can open an auction. Scammers participate in the auction and usually place a far higher bid than the last participant. That is to make sure they win the auction.
After the process ends, the swindler quickly changes their currency to one with a far lower value and gets to buy a valuable product for pocket change.
For example, the asset was being sold for 20 ETH, but the swindler switched their bidding currency to USDT after the auction ended. That’s how the creator gets robbed, and the swindler pays far less than they were supposed to.
Otherwise known as fake airdrops, this swindling technique involves the scammers promoting free NFTs in exchange for people sharing and spreading their message on their social media profiles. NFT scams on Instagram are particularly popular thanks to that.
Once you agree to the deal, since who doesn’t want free stuff for a favor that costs nothing, you’re asked to promote the offer.
To get the promised reward for your favor, the scammer sends you a link where to input your wallet details so you can receive the crypto coins. However, sharing such details only leads to you unlocking access to your funds that hackers intend to steal.
Although this type of financial trap isn’t uniquely linked to NFT stealing or only present in the NFT digital world, it has definitely been detected more than ever.
One of the most common ways the victims are contacted is by emails that carry a malicious link. Online ads also contain links to fake websites that ask visitors to enter information about their wallets, security keys or similar.
Hackers tend to abuse this strategy to get their hands on your NFT account information in order to steal whatever you have stored on it.
Staying Protected – Tips to Avoid Fraud
In essence, knowledge is the key to success and staying protected from malicious intentions. Before investing in anything, especially overly attractive deals, please do not be lazy to do your due diligence. Paying attention to these details could help:
- Always make sure to double check the product origin and price, seller’s identity and the validity of the website you’re on. If any of these elements seems even a slightest bit compromised or inaccurate, stay away from it.
- Once again, we have to remind our audience how crucial it is to keep your private information private and safe, without sharing it with anyone you do not know or trust. If there’s an extra security step, take it.
- If you can boost your security, do it. Even the simplest two factor verification process (2FA) could be the crucial element that adds an extra coat of protection.
- Base your investment decisions on education and plenty of information! Going through a thorough research and intel gathering will help you make the best moves while maximizing your chances to profit.
As the NFT craze continues and everyone is going into a buying frenzy with the idea of getting rich overnight, caution has to be practiced in every situation and at every occasion. After all, having your entire financial future depend on rushed decisions won’t lead to a bright outcome.
However, if it so happens that you were tricked and wish to attempt and recover your hard-earned funds, please contact us for help and guidance. Our tireless team of legal professionals can offer you advice and help with such issues.