8 Ways to Avoid NFT Scams

 

Actor Seth Green had plans to make his Bored Ape NFT, Fred Simian, the star of a new TV show. Then, a hacker stole his NFT as a part of a multimillion-dollar scam, causing him to halt the production of the present and ultimately pay ransom for the hacker to return the stolen asset.

Green fell sufferer to a phishing rip-off by accidentally connecting his crypto wallet to a malicious website, which allowed the hacker to switch four of his NFTs.

“The distant facet of the present situation forces folks to make use of more websites, e-commerce and trust in the providers they work together with. Attackers are intimately aware of this,” mentioned Nick Donarski, founder and CTO of blockchain solutions company, Ore System, through email.

The NFT market surpassed $40 billion in trading volume in 2021, so it’s in all probability not a surprise that cybercriminals are crafting NFT scams. Built In has recognized eight several types of NFT scams to look out for and suggestions for tips on how to keep away from them.

Ways to Keep away from NFT Scams 
Keep Your Login Private

Never share your crypto wallet info with anybody. If a hacker learns your seed phrase or private key, they'll access your wallet and remove NFTs or cryptocurrency. Consider storing your credentials in a physical place, like a hard drive.

Use Two-Factor Authentication For Your Accounts

Two-factor authentication can tip you off if a hacker is attempting to access your accounts. Enabling biometric login is one other type of verification.

Consider Using A Cold Storage Wallet

Cold storage wallets are offline ways to store cryptocurrency. The digital wallet is protected against online hacks.

Don't Interact With Suspicious Messages

Avoid contact with hackers by not engaging with any suspicious messages, texts, emails or websites. These are likely phishing attempts to try to download malware to your system or steal your credentials and delicate info.

Use Security Tools To Protect Your Devices

Anti-virus and anti-malware tools can shield your gadgets for those who do end up clicking right into a malicious link or software. Think about using a virtual private network (VPN) for added encryption safety.

Research Sellers And Websites Before Engaging 

DYOR: Do your own research. Take note of the website URLs, sellers and applications you access. Search for the blue check verification mark next to a vendor’s title, check out online evaluations and take a look at sellers’ social media and listings. 

Look Into An NFT's History, Too

Check out the timeline of previous transactions for an NFT. Cross check costs on different marketplaces to see if the costs are comparable. 

Use Reputable Marketplaces

Built In has compiled a record of 20 popular and trusted NFT marketplaces to consider using. Be cautious of new marketplaces with minimal safety. 

7 Types of NFT Scams

Rug Pull Scams

A rug pull NFT scam occurs when scammers promote a fake NFT or developers hype up an NFT to get investor money. Once they’ve acquired funding or the NFT is purchased, the promises are unmet, or the project is canceled completely. 

One example of a rug pull scam was the Frosties NFT collection. A number of hours after the NFTs have been minted, the Frosties Discord server disappeared, and the undertaking promptly shut down, scamming thousands out of their crypto. 

“Rug pulls are big business for today’s attackers,” Donarski said. “The blockchain is the wild west when talking about technology, and that is each a profit and a risk. At this time individuals are introduced with so much fear of missing out on the following large crypto or blockchain pump that they don’t take the time to research the initiatives and the organizations behind them.”

Phishing

Green was part of a phishing scam when he related his wallet to a malicious website. Phishing can look like fake ads, emails and popup ads that direct to fraudulent links where NFTs and cryptocurrency may be stolen. Be wary of direct messages on social platforms like Discord. Many scammers will claim you’ve won free NFTs, for instance.

Airdrop/Giveaway Scams

Beware of NFT giveaways. Scammers will typically use social media to promote NFT giveaways, encouraging folks to unfold the word about their NFT or join on their website in alternative for a free NFT. When it comes time to get the freebie, the fraudsters will ask for crypto wallet info and breach the victim’s account to steal NFTs and cryptocurrency. 

One air drop scam concerned a fake Rarible site providing users 5 times their quantity of RARI cryptocurrency in the event that they despatched 200-25,000 RARI. The scammer ended up simply taking the crypto and by no means despatched something again. 

Impersonation/Catfishing

Scammers will create fake social media accounts with accompanying spam websites to convince people to buy fraudulent NFTs. These profiles often imitate real artists. Different criminals create fake tech support accounts. The scammer would possibly send messages asking for account info so as to provide support after which subsequently steal the victim’s credentials.

Cybersecurity firm BrandShield carried out research displaying that Tom Brady, Mike Tyson and Kim Kardashian are among the many top celebrities whose likenesses are targeted for bogus NFTs.

Pump And Dump Scams

The pump and dump scam happens when a considerable amount of cryptocurrency is purchased by a group to drive up the value for demand. As soon as the value will increase, then the scammer dumps the assets and cashes out, leaving others with losses. 

One pump and dump instance occurred when influencers for the esports organization, FaZe Clan, promoted a new cryptocurrency referred to as Save the Children. Fans pumped cash into the coin however then the worth plummeted virtually in a single day. 

Counterfeit/Plagiarized NFTs

Criminals copy artwork and promote counterfeit versions of the NFT on reputable marketplaces. Fake and stolen NFTs haven't any value, and victims typically discover out too late once they’ve bought the counterfeit NFT. 

One hacker, Monsieur Personne, made copies of the famous Beeple NFT, “Everydays: The First 5000 Days,” which reached its peak with bidding around $200, compared to the unique selling for $69 million. 

Bidding Scams

Bidding scams occur when a scammer becomes the best bidder on an NFT, however when it comes time to pay, the fraudster switches out the cryptocurrency to one of lower value. If you’re reselling your NFT, always examine what crypto the highest bidder is paying with earlier than accepting. 

This would possibly appear to be a scammer bidding 5 ETH for an NFT, but when it comes time to pay, they swap the forex to one in every of much lesser value, like dogecoin.