Common NFT Scams and How to Avoid Them | WeLiveSecurity

Looking back at 2012, Colored coins This was the first indication of what we now call non-fungible tokens (NFTs), or nifty for some. Ten years later, this Blockhain-based assets Which can represent almost everything on everyone’s lips, especially in the world of art, sports and video games.

The NFT market began to steam up in 2020, growing more than 300% over the previous year and transferring millions of dollars worth of cryptocurrencies. In the first week of May 2022, however, the sale of these tokens 92% submerged Last September, the maximum was 225,000 to 19,000. The number of active wallets dropped by 88% from 119,000 in November to about 14,000.

Nevertheless, the market is still running cryptocurrencies worth thousands to millions of dollars, offering plenty of opportunities for scammers and raising many concerns about the security of these assets. To steal an artwork, a thief must first go through various obstacles and cameras inside a museum; Now, a digital wallet can be cracked using malware or social engineering techniques.

When digital artist King Han dies in 2020, scammers Take advantage The moment of selling his artwork as NFT, in his favor. Last September, the famous graffiti artist Banksy hacked his website, showing advertisements for his sale which was supposed to be his first NFT; A collector paid 336,000.

The lack of control over the NFT market makes it a place of opportunity for all kinds Scandalous. Several companies like Adobe are trying to create authentication stamps that will make it easier to verify the validity of a token. Despite some anti-fraud barriers, it is a fast-paced space that relies heavily on user behavior.

Here are some common scams involving NFT that you should be aware of and how you can avoid being victimized.

Direct message on discord

Conflict There is some greed There are various ways for cyber criminals and users to scam. The platform is divided into communities called servers where people can talk, stream and play games together.

Just last December, 373 members of the Discord Server, powered by the recently launched gaming NFT Marketplace Fractal, viewed their digital wallet authentication. CompromiseSolana lost a total of $ 150,000.

Other ways to scam Discord include sending direct messages (DMs) to deceive users into believing they are actually being approached by a brand, artist or influencer. Basically, the bigger the Discord network, the more likely it is to receive scam messages. You should be careful about clicking on links sent by strangers or answering any requests for money. By the same token, don’t let yourself get bogged down by new NFT opportunities or projects without checking if the offer is valid.

Fake profiles on social media

Social media users, whether on Twitter or any other social media platform, need to be constantly aware of potential fake profiles. Often, these are copies of real profiles, and a little attention to detail can be enough to distinguish them – sometimes it takes a letter from a scammer to tip you off.

At the same time, bots that use social media to respond to users’ messages or use technology support scammers to communicate with users and request information that may give them access to their crypto wallets. While bad actors may not always be successful, a small percentage of cheated users can make big money.

In addition, cybercriminals may try to reach users by sending messages where they act as if they want to chat or seek advice. Some red flags can help identify a fraudster, including the number of followers, the number of tweets and retweets, or the lack of original content in the account.

Phishing fraud

OpenSea NFT Marketplace Incognito Website

Fake websites are hunting for NFT wallets

Another fake site poses as OpenSea

Another attempt at targeting a crypto wallet

Another common strategy is to copy completely legitimate branded websites and apps. Copies of NFT Marketplace or counterfeit crypto wallets are shared via Discord, Twitter and forums as well as via email. The level of similarity with real companies is impressive, and it takes a deep look Identify small differences in URLs Or general format.

For this reason, it is always important to check the URL of a link before clicking, especially when websites require personal information. We should always remember the golden rule and never give seed phrases or passwords to anyone outside our NFT wallet.

Once you confirm that the website is genuine, the next step is to verify the authenticity of an NFT. Check the seller’s background and previous sales, but also check whether NFT is genuine and not being sold in other markets, especially when buying expensive crypto art in high demand. Expensive, suspiciously low prices should always raise eyebrows because scammers sell cheap copies.

Artist camouflage

In addition to the story of Banksy and his scammed website, other artists have gone through similar situations. Tyler Hobbs, the artist behind the art block project “Fidenza”, has condemned platform Solblocks for using his code to sell copies of his work. Derek Loffman’s artwork was sold through a fake account using the artist’s name, and even received a verified icon.

The list of similar scams is long, prompting artists to act by commenting, reviewing and condemning fake profiles for unauthorized sales of their art.

Pump and dump scams

Closer to the NFT conjecture, this type of scam involves an individual or a group of individuals who buy large quantities of NFTs (or cryptocurrencies) and sell them to themselves to create the false notion of artificially high demand for assets. Thus, market power resale will increase profits.

Many of these huge NFT “sales” are pumps and dumps or people sell it to themselves as part of a money laundering scheme. https://t.co/s5QIIKhUL3

– Robert Evans (only Robert Evans) (@IwriteOK) October 29, 2021

From the buyer’s point of view, this scheme seems to be validated by influential people who share NFT on their profile, considering it a great opportunity. Ultimately, these buyers expect a resale at a higher price, which never happens because the scammers clean up their footprints once they get their money.

Anger pull scandal

A common crypto scam is inherited by the NFT market. Anger tensions were quite common, benefiting from its main feature: when the scandal unfolded, it was usually too late.

Like a pump-and-dump scam, scammers will hype a project, solicit investment, and abandon it without notice. This usually happens when they believe they have ‘expelled investors’, withdrawn all funds from an NFT wallet and deleted their profiles from the marketplace and social media.

One of the most famous cases is the “squid game” and cryptocurrency inspired by the TV show Squid. In just a few weeks, the value of this token rose to 2,800. Suddenly, It has disappeared. All its social media accounts and its website have disappeared without a trace. The scammers, meanwhile, are believed to have stolen 3.3 million.

Bidding scandal

Fake bids are one of the most common scams in NFT auctions. This happens when an actual seller tries to auction an NFT. The seller indicates the cryptocurrency in which they want to pay, but a scammer can change the currency of their offer at a lower price.

Another way to do this is to add and remove an NFT list from a market, moving the decimal one number to the right. Regardless of the change, a buyer may pay a lot more than the amount he initially saw. As in real life, the price must be seen before the price can be paid.

Social media account hijacking

Fake offers and gifts are a great way to generate user interest (not just) in social media. Surprisingly, they can even come from well-established user accounts. The reality, however, is that these accounts are often hijacked by scammers to promote fraudulent schemes.

We were compromised, do not click on any link, do not mint.

The threats have been removed, however, and we will continue to monitor the server until it is completely secure.

Please remember to double check, and check each announcement three times.

– Lazy Lion | Lazy Lions 🦁👑 (azLazyLionsNFT) May 18, 2022

Once a user tries to access the fake offer, they are asked to enter their password or personal information, provide their details and receive nothing in return.

Counterfeit mint

In these schemes, fraudsters add NFT to influential people’s wallets, making it look as if celebrities have actually minted NFT on the blockchain. This is because many buyers monitor specific wallets for new activity in order to anticipate widespread interest and increase the value of NFT.

These scams involve elements of most of the strategies mentioned earlier, ranging from artist disguise to pump-and-dump fraud. According to The open seaMore than 80% of the NFT created for free on its platform, the largest NFT marketplace, was counterfeit, stolen or spammed by other artists.

7,000 times people have stolen my art and listed it The open sea And they even managed to collect like a huge middle finger for my IP rights. Wtf?#nft #Article # Open sea # Violation #nftcommunity pic.twitter.com/LY5Jxb2N2r

– Aja Trier (jaAjaArt) January 5, 2022

NFT security tips

There are many scams to be aware of when diving into the NFT world and as usual, scammers never miss the opportunity to make golden money. So, it’s important to always be mindful – a healthy dose of skepticism can save you some headaches down the road.

Here are some quick tips on how to stay safe when using NFT:

• Do not share your seed phrase or password with anyone.
• Use strong and unique passwords with multi-factor authentication whenever it becomes available.
• Always check the DM you received.
• Don’t click on any link that promises to be free or you’ll need to reply quickly. And if you are tempted to do so, first check the source of the link This applies even more to Discord.
• Keep your tokens in a cold-storage hardware wallet, not in a software (aka ‘hot’) wallet.