03 shocking cases of NFT scams & how to stay safe

You can find cases of “NFT scams” on Google, which will expose you to a world of bizarre and unbelievable tricks scammers use to steal your money.

In just a few months since 2023, NFT scam-related events have already started to hit. Let’s look at some of the scams and hacking techniques that have been employed by scammers in this year.

Scam #1

First, there is a recent scam where users believe that their address is selecting non-fungible tokens for someone else.

An affected user named @cygaar tweeted several times about the scam. The user clarified that several applications track token transfers using “events,” which are notifications that can be made available to the general public during a smart contract transaction.

To locate NFT transfers, Etherscan and OS rely on events. There are transfer events for ERC721 as well as TransferSingle/TransferBatch events for ERC1155 in NFT transfers.

NFT contracts notify token owners and transmit transfer events whenever a token transfer occurs. Instead of updating any internal balances in situations like this scam, the token contract just broadcasts a TransferSingle event, which leads applications to believe that a non-fungible token has been transferred.

The fraudster created a false collection, produced a number of tokens, and posted them for sale on OpenSea. They utilized a different wallet to purchase the tokens. The transfer function in the fraud contract produced fake transfer events with different addresses.

Scam #2

The next NFT scam to become more widespread is “Address Poisoning.” In order to “poison” the transaction history, the scammer sends a $0 token transaction while a user sends a regular transaction.

In an effort to prevent the user from checking the full address and copying theirs in a subsequent transaction, they use an address that has the identical initial and last few characters as the actual transaction submitted by the user.

It is advised to use the Address Book feature or carefully review the complete address. Users can access “Menu > Support” via the web or the app by going to https://support.MetaMask.io. For response from the chatbot, select “Start a Conversation” from the menu.

Security is also provided by hardware wallets, but these shouldn’t be your only source of assurance.

Scam #3

The British company NFT Investments reported losing assets worth $250,000 in a cyberattack on Thursday, or January 12, 2023.

Working with “entrepreneurs to generate NFT assets” is how the company describes its role. Since the incident involved a company whose shares are listed on the Aquis Stock Exchange Growth Market, information about it was released via the Regulatory News Service of the London Stock Exchange.

The company claims that a false phishing attack from an unidentified external source was discovered on Monday, although it made no mention of how the assets were stolen. A small proportion of the company’s current net assets — less than 1% — are included in the loss.

How to avoid NFT scams?

Here are some tried-and-true strategies to protect yourself from scammers:

1. Any NFT collection that is both bought and sold by limited wallets needs to be avoided.
2. Twitter and Discord have both been used effectively to determine a project’s legitimacy. The project’s popularity and an active community that exchanges knowledge and debates it are signs that it is a legitimate project.
3. Research is essential to protect yourself from a fake NFT. The creation of the NFT by a verified account should be among the first things to check. A blue checkmark on the artist’s profile picture serves as a trustworthy indicator of authenticity. Finding and verifying the social networking platform is also advised if it is not available.
4. Links that seem suspect should be avoided as they may reveal account information to scammers.
5. Never distribute your passwords or seed phrases. For further security, the account should enable two-factor authentication.
6. The project’s name can also be checked on well-known markets, which is a very trustworthy technique to determine the legitimacy of the collection.

To conclude, it is difficult to stop NFT scammers, and the strategies they come up with to carry out their wicked plans demonstrate how creative their minds are. All that might be done to ensure a positive experience in the NFT world is to stay alert when participating in it and stick to the aforementioned advice.

Disclaimer: The information herein is for educational purposes only and should not be considered financial, investment, or trading advice. Please conduct your own research and due diligence before making investment decisions. You understand that you are using the Information provided at your own risk.