NFT Theft: Tips for Keeping Your Assets Safe

Blockchain, News, Opinion | June 21, 2022 By:

While artwork theft is not necessarily new, it is taking a new form in the digital world. Major works of art like the Mona Lisa or Starry Night have plenty of physical protections to keep them safe in The Louvre and the Museum of Modern Art (MoMA), respectively. However, is an original piece of art safe when it exists online?

With the explosive growth of non-fungible tokens (NFTs), it’s no surprise that these digital assets are now seen as attractive targets for cybercriminals looking for a big payday. Whether it’s a famous NFT from the Bored Ape Yacht Club (BAYC) or one from the Moonbirds collection, understanding what NFT scams are out there is crucial for those who own these assets.

Below, learn more about NFT scams, some high-profile cases of NFT theft and tips to keep your NFTs safe in an evolving threat landscape. 

Common Types of NFT Scams

While it may seem challenging for someone to steal an NFT, it can and does happen. Some NFTs are expensive, making this a major concern for NFT owners. If there’s anything hotter than NFTs right now, it’s the business of NFT theft.

Most times, NFTs are stolen by account takeover fraud and account hacking. An NFT owner’s digital wallet can now be cracked open using malware or social engineering tactics. The NFT market is unregulated, meaning there are plenty of opportunities for malicious users to scam NFT owners into turning over their assets.

Here are some common types of NFT scams to look out for:

  • The Rug Pull: Scammers promote a fake NFT project, draw buyers in, take their payment and remove the user’s ability to sell the NFT.
  • Pump-and-Dump: A group of people buys a large amount of crypto to drive up the demand price. Once the price is up, the group sells (or “dumps”) the NFT to cash in on its gains and causes everyone else to lose out.
  • Phishing: An illegitimate email, ad or website will request a user’s digital wallet login credentials. Scammers will access a user’s wallet and drain the account of NFTs and crypto-assets.
  • Fake Social Media Profiles: Scammers will use a fake social media profile to promote a fake NFT project, misleading the buyer.
  • Bidding Scams: After a scammer lists an NFT for sale, they wait until they receive the highest bid and then switch out the cryptocurrency for one of a lesser value.
  • Investor Scams: A scammer will create a worthwhile NFT project, rake in investments and then disappear without a trace.
  • Plagiarized NFTs: Some artists working on sites like DeviantArt or ArtStation will see that someone downloaded and copied their work and sold it as an NFT on the blockchain.

Any type of fraudulent activity regarding finances is concerning. For example, it’s common for people to go after someone’s mortgage or pension fund, violating several laws and causing significant damage to the victim. While financial fraud is not new, these common NFT scams and other types may emerge as the NFT market continues to grow. 

High-Profile Cases of NFT Scams

In February, a group of hackers attacked OpenSeas, the wildly popular NFT marketplace. They targeted high-value tokens, including those from BAYC and it’s estimated that the group earned around $1.7 million. 

Another case where investors were scammed was during the Frosties rug pull. Creators were selling NFTs of cartoon characters made of ice cream scoops and promised investors they’d have the chance to enter giveaways and receive other perks after the NFTs were released.

The Frosties creators gave regular updates before the launch. They even announced a plan to incorporate Frosties into a metaverse game. However, the site suddenly stopped working and the creators cheated investors out of more than $1.1 million

Actor and comedian Seth Green lost around $200,000 in BAYC NFTs due to an NFT phishing scam in May. Green claims in a tweet that the phishing link he clicked on “looked clean.”

One of the main issues with NFT theft is that owners cannot depend on any regulatory body to reverse any transactions on the blockchain. Victims of NFT scams often lack any resources to rectify the situation, which can be costly depending on the value of their assets.

Tips for Keeping Your NFTs Safe 

So, how can you keep your NFTs safe and avoid NFT scams? Continue reading to learn some basic tips to follow to protect your digital wallet and NFTs.

  • Create a Strong Password: While it may seem obvious, use a strong, unique password with special characters, capital letters and numbers to protect your digital wallet. Avoid reusing passwords, as it can make it easier for hackers to gain access to your wallet or cryptocurrency account.
  • Enable Two-Factor Authentication (2FA): When possible, enable and set up two-factor authentication (2FA), sometimes known as multi-factor authentication (MFA). This will help protect your account from hackers and make it harder for them to steal your assets.
  • Never Click on Suspicious Links/Attachments: Even if a link sends you to a site that looks legitimate, it could be fake. Avoid clicking on any attachments or links that seem suspicious — trust your instinct and use caution.
  • Crosscheck NFT Prices: You can go to other trading platforms, like Axie Marketplace, OpenSea or Mintable, to check if an NFT’s price is similar. If it’s much higher or lower than the prices on a legitimate trading site, it is most likely a scam.
  • Verify NFT Sellers: New NFT marketplaces are cropping up but lack proper security. Try to buy NFTs from reputable, established sellers you can verify and trust. Rarible, MakersPlace, Axie, OpenSea, Mintable and Foundation are good options.

It’s also wise to consider storing your NFT in a cold-storage wallet for even more protection. You can backup your NFT to avoid theft or scams.

Beware of NFT Fraud, Scams and Theft

Because NFTs will grow in popularity in the coming years, it’s worth discussing what types of scams are out there. Cybercriminals are becoming highly sophisticated and will do whatever is necessary to steal a user’s assets. Avoid becoming the next victim of an NFT scam by following the tips listed above.