NFT Thieves Turn Bored Ape Yacht Club into a Seedy Tavern
Things move so quickly in the decentralized world that one day a certain product or service is the hottest name in the market and then the next day, “poof!” Entire companies, crypto coins and crypto products, such as NFTs and crypto mixers become infested with financial fraud and either move to the Darkweb or disappear altogether as quickly as they arrived. As I have covered fairly extensively, the NFT is sort of the poster child for this market phenomenon. What was a star in the eyes of many is now so tarnished that the purchase of an NFT should come with a warning label.
Danger: this product does not protect the buyer from fraud, identity theft, or financial ruin
The Bored Ape Yacht Club (BAYC)is my case in point for the week. Have you heard the avalanche of bad news surrounding this one time, must-have NFT? Investors in the BAYC’s collection of apes have been getting robbed left and right, and the media has been fairly loud about it, mostly because the owners of these valuable jpegs that were victimized are celebrities. The list of celebrity BAYC members who have been robbed is pretty long, but the theft of actor Seth Greene’s (Robot Chicken) collection of apes has taken front and center stage. As a result, his story is overplayed at this point, but since it is somewhat weird it stays in the news cycle.
Although I do feel sorry for Greene and other celebs who lost apes, I have the most sympathy for those BAYC members who are not uber-famous, but rather somewhat regular people who got jacked by hackers. Their stories are the most interesting, in my opinion, but since the source involved isn’t famous the media won’t spend resources on it because it won’t generate clicks. One of those stories in particular, that of Jeff Nicholas, is particularly interesting and frightening at the same time.
According to the Verge, Nicholas, who is what I’d call sort of famous to some, but is more like a Renaissance Man stuck in the 2020s, entered the Discord channel for OpenSea looking for assistance with a royalty issue related to his apes. There he met a person named Pascal who invited Nicholas into a separate Discord named the “Open Sea Support Server”. Sounds legit right? He was given a customer number as you would at the DMV and asked to wait in line until his number was called, but he was able to converse with the “OpenSea customer agents” about his royalty issues while in the customer queue.
The “agents” gave him what would normally be considered amazing customer service and it got to the point where the agents said they needed him to share his screen with them, which he did thinking nothing abnormal was afoot. Over the next hour, however, Nicholas lost his inventory of NFT apes, cats, and dogs from his wallet, costing him about 150 ETH, or roughly $480,000. It all took place over the course of an hour and though it is a crime, the nature of it is so slick it makes the victim feel like they volunteered for it. Nicholas even put some of the blame on himself.
“It takes focus to be like, ‘I am my own bank, and I am the custodian of my own money,’” Nicholas said. “I can’t just go through it like when I go to the bank and I’m distracted on my phone. You have to be 100 percent in the moment. Otherwise it’s very easy to miss some signs.”
Perhaps that is the best advice for all of us today in regards to everything we are doing, not just managing our digital portfolios. I don’t know if what happened to Nicholas could have been avoided if he was paying more attention. Perhaps, since he is a technology wizard. What about the average person who is not a tech wizard? Would they notice they were being corralled into a virtual stick-up? Doubtful. That is why we have financial regulations in the centralized world — to adjust for those who could be tricked into easy cons and to put a stop to those who attempt to profit from illicit activities, like grand scale theft.
If you are not wealthy enough to lose the investment or not tech savvy to notice when you are being digitally fleeced, perhaps now is not the time to act on your FOMO by investing in any type of NFT? My best advice to you is to stay away for now, as I am doing. If you do decide to invest in an NFT, please take the following advice from Slate writer Nitish Pahwah:
“…make sure you watch out for all the potential weak spots in the system: fake accounts on every single social and trading platform, vulnerable online storage systems, sweet-talking snake-oil salespeople, issues with blockchain tech, crashes in the volatile crypto market that wipe out valuations and lead to scammers taking advantage. After all, you’re likely going to a pay a lot of money for a static ape on your computer. Still, better for that ape to be bored than gone.”
I could not say it better myself.
-end
*Disclaimer: The Alacer Group’s Velocity Financial Crimes Solution Suite provides 360 coverage to help financial institutions, banks and cryptocurrency exchanges comply with BSA / AML regulations.
