Non-fungible tokens (NFTs) have been making headlines since 2021, and many investors have profited handsomely from this brisk business. The popularity of the NFT sector has also piqued the interest of cybercriminals, who are continuously on the lookout for new ways to scam people out of their money under the pretext of NFT initiatives.
The list of prevalent NFT scams grows by the day, driving many individuals away from the NFT arena. Taking the time to research some of the methods used by scammers to mislead individuals will help you avoid falling victim to their scams. The following are some examples of frequent NFT scams:
Related: How are NFTs Booming the Show in Oregon?
Some Common NFT Scams
However, like with other businesses, the NFT market has its fair share of scammers. Malicious players discover methods to profit from customers pouring money into the sector.
Scammers’ tactics are also growing more complex, and they will go to any extent to defraud NFT holders, especially because some NFTs are worth millions of dollars. Here are some examples of frequent NFT scammers.
1. Fake offers
Scammers regularly make fraudulent promises to NFT holders. Phishing emails, phony links, and service offerings that need individuals to sign fraudulent contracts are all known techniques. People will sometimes happily sign for ostensibly genuine reasons, such as a compensated offer to assist animate your NFT. After you sign the transaction, tokens and NFTs may be taken.
Scammers hacked the NFT marketplace Fractal in December 2021, sending a link to interested customers via the platform’s official Discord. Within 10 minutes, around 370 individuals lost 862 SOL, which was valued at more than $150,000 at the time.
2. False NFT projects
Several rug pull scams have occurred in the NFT sector, in which a recognized or unknown developer releases an NFT for sale. People may forgo appropriate due research and immediately pour money into a new NFT with rising popularity for a variety of reasons, including the chance of big profits. In many circumstances, these ventures lose value and cannot be sold for a profit or for the initial money.
The unidentified creators then take all of the money and are virtually always inaccessible. Frosties rug pull and swindle is a well-known example. Buyers of the cartoon ice cream digital collection lost a total of $1.3 million in January after the creators and funding vanished from OpenSea.
3. Fake Holder Verification Bots
Scammers may develop programs that imitate real discord verification bots. Owners then grant permission for these bogus bots to pass vital info to fraudsters who steal NFTs.
4. Counterfeit NFTs
Scammers can develop false NFTs that look like the originals, especially if the real is not well known. The forger would then sell the false NFT on a marketplace, where an unwary consumer may buy what they thought was the genuine version. The buyer is left with a useless asset since no one wants a plagiarized or counterfeit NFT.
5. Pump and dump scams
A bunch of crooks artificially pumps a worthless NFT collection, causing price and demand from speculators to rise. Within a short amount of time, the collection attracts enough notice that others deem it valuable and begin purchasing it. However, as soon as they get enough money from the sale, the gang will pull the plug and disappear.
The price of the NFT gradually falls, preventing holders from reselling their worthless NFTs. The Squid Game token is an example of a pump-and-dump scheme. Last year, unidentified designers released a token that capitalized on the popularity of Netflix’s Squid Game series. The SQUID cryptocurrency surged beyond $2,800 before collapsing to $0. The fraudsters stole more than $3 million in total and have yet to be apprehended.
NFT Scam Strategies To Avoid
Here are some major NFT scams to avoid if you come across them:
1. Fake offers
People are always seeking freebies, which might lead to them losing money to fraudsters. Some people frequently pose as workers of major NFT markets like OpenSea and trick users into joining up on their websites.
The site where people sign up is a clone of the actual site where they collect essential information. To entice individuals, they generally provide freebies. One approach to avoid this scam is to double-check any website and browse through their social media networks.
2. False NFT projects
A Google search for NFT markets can provide numerous results, especially for beginners, and most of the time, many fake ones will appear. These fake sites do not have any NFTs to sell, but they fool their visitors into purchasing those fake NFTs from them.
They can sometimes even gain access to your private keys, causing even more issues. To purchase NFTs, use reputable NFT markets such as OpenSea or Looksrare Marketplace.
3. Fake Holder Verification Bots
Scammers will occasionally use technological issues to pull out some of the largest NFT Scams. This is a good example of when you’re experiencing trouble with a marketplace. Users may seek assistance from official forums such as Discord, while fraudsters may masquerade as market technical staff.
To gain access to your wallet, they may request your security information or screen. To avoid this scam, always seek assistance from a legitimate customer care system.
4. Counterfeit NFTs
This method is used in some of the largest NFT scams. Scammers take an original NFT, make duplicate counterfeits, and then sell them to unsuspecting victims.
You may believe this is an actual NFT and purchase it from these scammers, only to discover you were duped. Because they are non-fungible, you cannot make a new NFT from the original.
5. Pump and Dump Schemes
In the crypto world, “pump and dump” is nothing new. This is a circumstance in which a group of individuals buy a large amount of NFT and hype it up to make it appear highly popular to others.
Once they have grabbed people’s attention and they begin to buy the NFT, these groups begin to sell, leaving others who arrived later to face the losses. Examine the transactions on an NFT before attempting to buy to identify a pump-and-dump strategy.
Related: 7 ways Make Money with NFTs As a Beginner
Common NFTs Scams and How to Avoid them Frequently Asked Questions
What are some common NFT scams?
- Phishing Scams.
- Rug Pull scams.
- Bidding Scams in NFT Collection.
- Pump and Dumps in NFT Projects.
How to identify NFT scams?
A counterfeit NFT store may display an inaccurate minting address.
Are there NFT scams?
A rug pull NFT scam occurs when scammers advertise a bogus NFT or developers hype up an NFT in order to get investor funds.
What percent of NFT projects are scams?
More Than 80%
Can an NFT drain your wallet?
YES, Airdropped NFTs Have the Potential to Deplete Your Crypto Wallet.
Can someone steal my NFT idea?
Yes
Can you get scammed by an NFT trader?
A regular NFT trader fell prey to one of the Web3 space’s newest scams in September 2022.
Related: Why are NFTs Growing in Popularity?
Final Thought
The NFT business is clearly thriving, and many creative initiatives are emerging in this field. This success has drawn the attention of fraudsters, who are constantly devising new ways to rob individuals of their money.
Because of the large number of NFT initiatives, it is difficult to distinguish between legitimate and fraudulent enterprises. Learning to be wary and conducting research will assist you to avoid getting duped by NFT-related projects.
