Recognizing potential NFT scams that could jeopardize your investments is essential in the rapidly expanding non-fungible tokens ecosystem. This article sheds light on information that can help you protect your assets from different forms of fraudulent activity.
Rare and Common Examples of NFT Scams
Rug Pull Scams
Derived from the phrase “pulling the rug out,” a rug pull is one of the common types of crypto scam where fraudulent developers get investors into what seems like a profitable new project, then vanish with the money, leaving the investors with nothing of value. Usually, these types of scams have their staging ground in social media platforms, which developers use to create buzz about their non-fungible tokens.
The Frosties NFT rug-pull, run by two 20-year-olds named Ethan Nguyen and Andre Llacuna, is a perfect instance of an NFT rug-pull scam. They made many claims about their NFT, such as freebies, first dibs on a metaverse game, and special mint passes. But after investors contributed more than $1.3 million, they closed their website and social media pages.
Phishing schemes are also a common type of NFT scams. It involves cybercriminals sending phony emails or messages that look and feel like they are from reputable NFT platforms, tricking victims into disclosing their private wallet keys.
One famous instance of a scam where scammers stole about $1.7 million in non-fungible tokens is the OpenSea phishing campaign. Users were asked to update their contract data by OpenSea, but fraudsters supplied links to phony websites by copying the email address of the trading platform and sending them to NFT owners.
Among the more uncommon kinds of NFT frauds are investor scams. Investor scams typically include the creation of authentic NFT projects by fraudsters who then market them as profitable investments. But in actuality, the projects are useless. Once they have amassed sufficient investor funds, the con artists disappear.
The Evil Ape investment fraud is one example. The developer, who remained unidentified, vanished after taking 798 Ether, which is worth more than $2.7 million.
Safeguarding Your Investments: Strategies to Steer Clear of NFT Scams
- Avoid clicking on suspicious links. Clicking on the wrong link can leave users unintentionally handing over their account information to a scammer.
- Never reveal your seed phrase or password. Think about enabling two-factor authentication for added security.
- If you want offline access to your digital assets, consider using a cold storage wallet.
- Before making an NFT investment, do thorough research. Remember to always confirm the identity and background of the NFT artist before committing.
- Make use of a virtual private network (VPN) to anonymize and encrypt your NFT communications.
The NFT space is filled with many NFT scams, and people can lose all their digital assets if they don’t keep an eye out for them. These security tips can help you navigate the NFT ecosystem and safeguard your assets.