Whenever an exciting, profitable trend reaches the mainstream, there will always be those who seek to capitalise on the hype using fraudulent methods. Despite all the progress to stamp out these bad actors with regulations and improved technologies, the billions of dollars stolen over the past decade have left the space with a bit of a bad reputation. Now, with the advent of Non-Fungible Tokens (NFTs) and their breakout into the mainstream, the con artists have found a new angle to work.
NFTs are digital assets that can take many shapes and forms, from single pieces of art to hour-long audio/visual experiences, the potential of these new assets is gigantic, especially for artists. These digital pieces are also verifiably authentic, meaning that each NFT can be traced back to its creator, with its entire sale and price history available for all to see.
It’s an amazing opportunity for creators as they can now monetise their art and immortalise its existence on the internet and Ethereum blockchain. Though with all this authenticity and verifiability built into NFTs, it’s concerning to find that even they still aren’t safe from fraudsters.
NFT Enthusiast Pranksy — Pranked by Fake Banksy!
Most notably on the final day of August a cunning individual posed as the famous street artist Banksy and pioneered a scam that shook not only the NFT community, but the global news and art world. The disruptive hacker posted a link on Banksy’s official website for which the Wayback Machine proves existed and managed to swindle over 100 ETH, current value of $395,000 from Pranksy, a well-known NFT aficionado. An unsuspecting Pranksy, could not think anything other than it being genuine considering the link displayed was https://banksy.co.uk/nft.html. Unknowingly, he was falling victim to a very clever takeover attack on Banksy’s site.
The well-known NFT connoisseur’s bid of 100 ETH was quickly accepted within 1 hour and it was at this point suspicions were raised. The global news world was quick to pick up the story and headline’s were posted about mystery artist Banksy entering the NFT world. The suspicions seemed to be validated when the hacker quickly removed the link from Banksy’s website and minted another NFT a short while after. These signs all led to Pranksy feeling he had been duped, and to further the confirmation, Banksy’s spokesperson informed the BBC that Banksy had not embarked into the NFT world and that the street artist “hadn’t created any NFT artworks”.
It was at this point Pranksy had accepted being scammed but to his delight the hacker returned the funds after the fraudulent act hit the public news. Moreover, Pranksy had tracked down the hacker on Twitter, and following the recent Poly Network attack, it’s no surprise that the fraudster may have felt some heat and returned the funds in an act of avoiding further repercussions.
Some are deeming this a publicity stunt knowing Banksy’s nature of shocking by surprise, like when automatically shredding a piece of art right after bidding ended for a Sotheby’s auction in 2018. And who better to prank the world with than an anonymous NFT guru who parodically uses Banksy’s pseudonym.
Although this attack was a very clever and technically organised infiltration, there are many more scams that the NFT community and newcomers should be aware of and use the right precautionary measures to avoid falling victim to these elaborate schemes.
So, let’s show you what scams are out there and how to spot them…
Counterfeit NFTs & Artist Impersonation
Considering that NFTs are unique, traceable digital assets, it comes as a surprise that there have been instances of fake NFTs on the market. In addition, there are cases of artists having their identities stolen and leveraged on major marketplaces.
This can happen if someone steals artwork and then mints it as an NFT of their own, which they can then take and sell online. Even some of the biggest marketplaces in the world such as KnownOrigin and SuperRare have had individuals posing as artists. Perpetrators are taking advantage of easy registration procedures to then sell art that isn’t theirs.
Speaking with NFT artist, Uzzi, he noted:
“It taints the reputation of the NFT movement and scares artists away. Artists spend many hours creating art for it to be copied and sold with a few clicks of a button. This can be detrimental to the artist’s livelihood and mental well being”.
The problem is governance and how these marketplaces verify artists, an issue that is still being addressed. For your own security, using Google and Twitter, you can look up an artist and quite easily ascertain whether or not they’re creating NFTs. Check their blogs and social feeds, most artists will have plenty of posts and information if they are pursuing NFTs on a professional level.
With regards to fake NFTs, there are a few avenues you can take to ensure they’re the real deal.
- Take a look at the price of the NFT and compare it against similar products from the artist or brand. Does the price seem too good to be true? If so, it probably is.
- Check the account of the seller if they display the correct social media links, does the seller have a presence on other marketplaces? Are they selling a duplicated NFT elsewhere? If so, you’ve found a fake.
- If there are 2 active listings for a 1:1 NFT and one of them exists on a reputable marketplace such as Nifty Gateway, then it hasn’t been transferred out to a private wallet, meaning it can’t exist elsewhere. The listing on the other platform is likely a fake, you can verify from also checking the wallet that created the NFT.
Perhaps one of the oldest tricks in the book, brand impersonation has been a scam in the crypto space since day one. Typically this type of scam can be found on Telegram, Twitter and other major social channels.
As you can see from this image, there are many claiming to be the ‘official community’ or ‘official support’ channels of the brand.
These groups will attempt to scam users of their money for fake or non-existent NFTs, or use tactics to get your private keys.
Never give anyone your private keys.
Exercise caution when joining such groups and try to enter groups through direct official channels for example using the social link on the official website or Twitter page. A simple Google/Twitter search can be the difference between getting scammed or saving yourself through a bit of due diligence.
Replica Websites & Fake NFT Marketplaces
One of the easiest ways to get caught out is simply by stumbling onto a website that looks and feels like the real thing. This type of scam isn’t exclusive to the world of NFTs and is likely to be a pervasive scheme for years to come.
During the absolute height of NFT mania in the first quarter of 2021, there was a significant increase of domain name registrations that contained the names of established NFT platforms such as Rarible, OpenSea, and Audius. According to Bolster, a deep learning-powered fraud detection and prevention platform, domain registrations of this type increased around 300%.
Fake NFT marketplaces are also propping up, and are instead posing as completely legitimate and original websites of their own. Bolster has a free URL scanner called CheckPhish, so if you’re ever unsure of a particular website, use their tool and check for yourself.
In summary, before purchasing an NFT, double-check the website URL, use Google, Twitter, and make sure you’re in the right place.
Airdrops & Giveaways
Cryptocurrency giveaways and airdrops are a common means for startups and established crypto companies to distribute or reward users with free tokens. It’s usually a sign of goodwill from new companies who want to thank their early supporting contributors, or for larger firms who wish to do the same for long-term users; this type of offer also applies to competitions and raffles.
In the instance of a scam, you’ll be contacted on telegram or have stumbled across a posting somewhere online. The scammers will provide an address and request you to deposit your funds, or even sometimes be bold enough to request private keys or other details — do not provide such information.
Scammers will naturally gravitate toward this method just as they do when impersonating brands, and so the same due diligence applies. Use a service such as CheckPhish, dig through the company’s Twitter, blogs and any related forums, it shouldn’t take up much of your time.
As the NFT sector grows, scammers and fraudulent actors will also try to be two steps ahead and look for new innovative ways to dupe people out of their funds. That’s why it is always good to recognise the top projects in the NFT space such as The Sandbox who have collaborated with $BURP Token for the monthly NFT Raffle giveaway with an exclusive set of Sandbox partnered NFTs. A selected amount of NFTs will be up for grabs in the monthly NFT Raffle so make sure you don’t miss out on the action!
Stay up to date with everything by following the channels and joining the social communities!
$BURP is the official token of the $BURP ecosystem of products including but not limited to non-custodial token management, staking mechanisms, NFT raffles and swap-fee rewards via $BURPback.
Cryptocurrencies and crypto tokens are generally not regulated and investors do not have access to recourse or compensation schemes such as, for example, in the UK, the Financial Ombudsman Service or the Financial Services Compensation Scheme. Investing in cryptocurrencies and purchasing crypto tokens can be high risk and investors should carefully evaluate their appetite for risk and their understanding of trading cryptocurrencies prior to entering into a transaction.