Top 5 Common NFT Scams Types
An overview of well-known NFT fraud cases to investigate to avoid financial losses.
Scams are growing in popularity as NFT becomes a phenomenon. As many new investors have been attracted by the potential and growth of blockchain and NFT. However, some market participants are immature, making them ideal targets for scammers and resulting in significant financial losses. We'll provide readers a broad overview of well-known NFT fraud cases to investigate.
Rug Pulls
A rug pull is a social media trick that promotes a crypto coin. The project offers interesting items as well as fantastic profits for investors. After the buzz has reached a fever pitch and investor money has rolled in, the scammers remove all social media profiles and quit the business. Then, the price usually drops to zero. An existing article to smell a rug tips is available on Trait Sniper blog.
Evolved Apes was one of the famous NFT scam cases when the creators disappeared with $2.7M, which is expenses associated with the project, such as marketing and game development. Evolved Apes supplied 10K items that enabled investors to participate in an in-game competition in which characters competed for rewards. Neither the winner nor the artist gets any refund in the end.
Evolved Apes
Phishing Fraud
Despite phishing being an old trick, it is still widely used. Phishing scams often contain false advertisements, emails, and pop-ups that direct users to a fake website. The fake website will ask for their private wallet keys. As result, scammers may drain any NFT collections or cryptocurrencies in the digital wallet once they have the secret phrases.
Any blockchain network, particularly one that is popular, might be fake. Example:
OpenSea fake website
Please careful checking before clicking any links!
Bidding scams
Bidding frauds are common when you want to sell NFT on the secondary market. Scammers submit the highest offer when you put your NFT up for sale, but these scammers may modify the cryptocurrency used for bidding without your awareness. Instead of receiving 10 ETH (~ $17K at the writing time), you will suffer potential losses if the scammers change to $5.
So, double-check the currency utilized throughout the transaction and never accept bids that are less than what you expected.
NFT giveaways/airdrop scams
Scammers advertise NFT giveaways on social media or via direct messages on Discord, with the introduction to attract new users. To collect the reward, the scammers request cryptocurrency wallet details in order to transmit the NFT, but they instead get access to the account and steal your money or NFTs in the wallet.
Check the legitimacy of senders, name brand social media pages, and if the link matches the NFT company's URL before clicking any link.
A scam case in the name of Trait Sniper
Pump-and-Dump Schemes
In cryptocurrency markets, fraudsters such as founders or collaborators will spread misleading or false information to inflate the price of an asset before selling off their shares at a higher price. In a pump-and-dump NFT scam, fraudsters also do the same way. Once the price goes up, they “dump” the NFT and disappear, leaving investors with worthless assets.
They generally create a buzz around an NFT by using social media and celebrity endorsements to push up the price. Alternatively, multiple transactions focused around one date in the NFT collection's transaction log might suggest a pump and dump scam.
Final thought
All types of scam final target is your asset wallets. So, please be careful and keep your private code and phrase in a secure location. We already have an article explaining how to easily prevent scams in the NFT market. Scammers, on the other hand, change their ways every day. We will immediately update security issues and strategies to stay safe in our blog soon.