More than a token warning on digital asset scammers
Excitement swirling around the fast-growing world of nonfungible tokens – better known NFTs – is leading to newcomers being ripped off by scammers.
NFTs – unique digital assets that are bought with cryptocurrencies – are booming in popularity, mainly as artworks, sport collectibles and items in online games.
Some people have made big money on NFTs, making the sector a magnet for fraudsters targeting those with a fear of missing out.
NFT brands business Meadow Labs says wherever there is perceived value, scammers will try to trap people.
“Scammers will take advantage of vulnerable people wherever technology is emerging,” says Meadow Labs chief marketing officer Mariella Mejia.
NFT Club’s Luci Goodman says scams are becoming increasingly common. “A lack of regulation leaves the space open for anyone to hire an artist to create NFTs and create a lot of hype online,” she says.
“This is especially easy when a lot of NFT collectors and creators remain anonymous online.
“Ultimately you should only invest in an opportunity you are 100 per cent certain is authentic. Never send your assets to anyone directly – always use a marketplace.”
NFT Club says common scams include:
• Phishing: Where scammers impersonate legitimate NFT marketplaces such as OpenSea, or target investors with fake advertisements asking users to share private wallet keys via email or public forums such as Discord.
• Pump and dump: Where a group of people spreads misleading information and buys a bunch of NFTs to artificially drive up demand, before selling out after victims bought in at high prices. • Counterfeit NFTs: These confuse victims into buying the wrong asset.
“Minting an NFT is easy and means anyone can upload a photo or image into an NFT, regardless of whether they own the intellectual property rights,” says Goodman.
Mejia says links in direct messages are always a red flag.
“DMs usually include asking people to click on a link and connect their wallet, sometimes even posing as the brand themselves,” she says.