There has been a sharp rise in NFT (Non-Fungible Token) scams in recent months as the publicity for them has increased. Once new tech trends become more mainstream there is always a rise in fraud by taking advantage of peoples lack of knowledge in the area, this happened (and is still continuing to happen) with Forex scams as well. We’re going to take a look at the 5 most common types of NFT scam to ensure that you don’t fall victim to one.
A rug-pull scam is where developers of a new NFT promote it excessively via social media, build hype in the project in order to gain investors before quickly shutting down the project and disappearing with the funds. Once they have enough money for investors they will simply disappear. There was a famous case called the Frosties NFT where the developers of it managed to steal $1.3 million in investors money before shutting down the project and disappearing.
This is perhaps the most well known type as scam as it has been used for years on websites in order to obtain peoples personal and login information. Most of the time phishing scams are done by emailing or posting fake links that aren’t actually the website you were meaning to go on. These types of scams have traditionally been popular on banking sites and government sites but are now being used on NFT sites as well. OpenSea is the most high profile website to be victim of a phishing NFT scam with fraudsters making off with $1.7 million.
When it comes to selling an NFT one of the most common forms of scam involves changing the unit of cryptocurrency used last minute so the seller ends up receiving far less than they expected. Let’s say for example you had decided to sell an NFT for £10,000 which would be around 0.5 bitcoins, the buyer could change the currency last minute and send you 0.5 of a cryptocurrency that is only actually worth £10. It is always essential before you confirm a sale that you double check what the agreed currency is and that it is still the same.
This is something that is becoming a lot more common. People posting either fake NFT’s or copies of NFT’s. An example of a fake NFT was one that was posted claiming to be by Banksy (when in actual fact he had never created an NFT, it was a fake). There are a lot of famous artists creating thousands of pieces of artwork online and it would only take someone to re-upload an item and create it as a new NFT whilst the original is still out there. It is always very important to thoroughly research the NFT you want to buy before going ahead with it, check the artists social media channels to make sure they are indeed selling that piece, check which site they are selling it on and go through the proper channels rather than simply clicking on a link you see posted.