NFT investment boom brings in attack of the scammers

NFTs have surged in popularity but their rising use as an asset and investment is attracting scams. Here’s what to look for.

Excitement swirling around the fast-growing world of non-fungible tokens – better known NFTs – is leading to newcomers being ripped off by scammers.

NFTs – unique digital assets that are bought with cryptocurrencies – are booming in popularity, mainly as artworks, sport collectibles and items in online games.

Some people have made big money on NFT purchases, making the sector a magnet for fraudsters targeting those with a fear of missing out.

NFT brands business Meadow Labs says wherever there is perceived value, scammers will try to trap people.

“Scammers will take advantage of vulnerable people wherever technology is emerging,” says Meadow Labs chief marketing officer Mariella Mejia.

NFT marketplaces have become popular places for art and sport collectibles.

NFT Club’s Luci Goodman says scams are becoming increasingly common.

“A lack of regulation leaves the space open for anyone to hire an artist to create NFTs and create a lot of hype online,” she says.

“This is especially easy when a lot of NFT collectors and creators remain anonymous online.

“Ultimately you should only invest in an opportunity you are 100 per cent certain is authentic. Never send your assets to anyone directly – always use a marketplace.”

NFT Club says common scams include:

• Phishing, where scammers impersonate legitimate NFT marketplaces such as OpenSea, or target investors with fake advertisements asking users to share their private wallet keys via email, Discord, Telegram or other public forums.

• Pump and dump, where a group of people spreads misleading information and buys a bunch of NFTs to artificially drive up demand, before selling out after victims bought in at high prices.

• Counterfeit NFTs that confuse victims into buying the wrong asset.

“Minting an NFT is easy and means anyone can upload a photo or image into an NFT, regardless of whether they own the intellectual property rights to it,” says Goodman.

Mejia says links in direct messages are always a red flag.

“DMs usually include asking people to click on a link and connect their wallet, sometimes even posing as the brand themselves,” she says.

And people should watch out for small changes to websites and URLs. “It could be as simple and innocuous as missing a letter or an addition of a letter,” Mejia says.

“One we keep seeing on Twitter is ‘drop your wallet address in the comment I’ll send you a substantial amount of popular currency’. If it seems too good to be true, dig a little deeper.

“Like any purchasing decision, it’s so important to do your own research about what and where you buy. Invest what you’re comfortable with losing. “

Originally published as NFT investment boom brings in attack of the scammers