Scams and fraud are a significant issue in today’s global economy. They have infiltrated various industries, including finance, trade, investment, hospitality, aviation, logistics, and manufacturing. Malicious actors have found ways to deceive unsuspecting individuals and steal their assets. With the rise of blockchain technology, these scammers have turned their attention to the NFT space. In this article, we will discuss some of the NFT scams to watch out for in 2023.
One common type of NFT scam is phishing. Phishing scams involve tricking victims into revealing sensitive information that can be used to breach security systems. In the NFT space, scammers may send fake website links to victims, asking them to input personal information. For example, in January 2022, CryptoBatz NFT holders received a phishing Discord link embedded in an old official tweet. They were directed to a fake Discord server where they were asked to connect their crypto wallet for verification. Unfortunately, those who followed through lost their crypto tokens. Azuki also fell victim to a similar phishing scam in January 2023, resulting in a loss of over $750k.
Bidding scams are another way scammers target NFT collectors and investors. In this type of scam, scammers manipulate the bidding process on NFT marketplaces. They may bid an unusually high amount on an item to outbid other genuine bidders. Once they win the auction, they alter the crypto token they offered, defrauding the seller. For example, a scammer may bid 40 wETH ($69,520) when others were bidding 5-6 ETH. They would then change the 40 wETH to a lesser token, such as 40 USDT. The seller may not notice the change and accept the altered bidding amount.
Scammers also create clone or fake marketplaces to deceive NFT collectors and creators. These scammers clone reputable marketplaces and host them on similar domains, fooling unsuspecting victims. They may clone the user interface of platforms like Blur.io or OpenSea.io. Victims may mistake the clone marketplace for the genuine one and unknowingly give the scammers access to their NFTs and Web3 wallets. X2Y2 marketplace fell victim to this type of scam in May 2022 through Google ads. The scammers cloned the reputable NFT marketplace’s address and stole 100 ETH before it was discovered. Scammers can also clone official Twitter or Instagram pages to further legitimize their scams.
Pirated or counterfeit NFTs are another way scammers defraud victims. They may sell copied NFTs on reputable marketplaces or offer fake NFTs at lower prices on clone marketplaces. Scammers can also alter duplicated NFTs by tweaking their attributes or color. Reputable or blue-chip NFTs are often targeted in this type of scam.
Rug pulls are fraudulent acts where scammers lure investors into investing in a project and then disappear with their money. They may hype a crypto or NFT-related project using social media influencers and promise glamorous tokens. Once investors have bought into the project, the scammers abscond with the funds. NFT rug pulls can also involve issuing random and non-unique NFTs to investors instead of the promised tokens.
To avoid falling victim to NFT scams, it is crucial to conduct thorough research and verification before taking any action. Double-checking transactions before signing them can prevent phishing attacks or short-changed NFT sales. It is best to use reputable marketplaces and invest in NFTs from brands with a proven track record.
In addition to the highlighted scams, there are other methods scammers use to defraud NFT investors, collectors, and enthusiasts. These include catfishing or impersonation, community hacks, and web3 wallet hacks.
In conclusion, NFT scams are a growing concern in the decentralized space. Scammers have found various ways to exploit unsuspecting individuals and steal their assets. By staying vigilant, conducting thorough research, and using reputable platforms, individuals can protect themselves from falling victim to these scams. Awareness and education are key in combating NFT fraud and ensuring a safe and secure environment for NFT enthusiasts.
