The NFT market is full of scams, and you can avoid falling prey to these by following basic cybersecurity best practices. For instance, stay away from social media accounts associated with fake NFT projects. They may be set up by cybercriminals to attract people to their website and marketplace. Scammers are as common in the NFT market as they are in the entire crypto ecosystem. As a rule, stay away from anonymous people and don’t interact with strangers.
Bounty airdrops
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Many NFT projects will advertise that their bounty airdrops will earn you a certain amount of coins in exchange for completing a variety of tasks. In reality, these airdrops are not actually free at all. Some of them are mere smoke and mirrors, designed to trick you into thinking you’re getting something for free. Others will combine tokens that are worthless with airdrops to trick you into thinking the project is legitimate.
Another way to spot a phony airdrop is to look for a legitimate whitepaper for the project. Some airdrops have no whitepaper or ask you to give your wallet address. Others have broken links, or do not ask you to complete social tasks. This means the airdrop may not be worth participating in. In either case, you’re probably better off just ignoring it.
The first step in avoiding a fake airdrop is to conduct extensive research before completing one. You should double-check all links, including those that look legitimate at first, but lead to malicious websites that will steal your wallet information. Also, make sure to check the legitimacy of verified Twitter accounts. Even though they look legitimate, these accounts are easily compromised and sold to scammers. Never rely on a verified Twitter account when participating in an airdrop.
When you receive a free airdrop, make sure you don’t pay for it! Many of these airdrops ask for payment for the NFT, which is a common scam. Never give out your private key to anyone unless you’re certain they are legitimate. If you have to pay for something, you’re probably getting a fake airdrop. It’s also important to avoid airdrops that require you to provide your private key, which are the weakest link in a crypto wallet.
The best way to spot an NFT scam is to check the creator’s social media accounts. Most of them will be active on Twitter, Reddit, and Discord. You can contact them directly to verify their legitimacy. You can also check the metadata on the NFT itself to determine who owns the coins. Some scammers will use an extremely famous NFT creator as a way to lure their victims into purchasing it.
Pump and dump scam
A common method of detecting a pump and dump scam in the NFT is by tracking the transaction history of the NFT. Diversified buyers often buy and resell assets at a steady rate, but if the same people are buying and reselling the same assets at a higher rate, this is a sure sign of a pump and dump scheme. In such cases, investors should stay away from the NFT and seek more reliable sources of information.
Another popular NFT scam is the “airdrop” scam. In this scam, scammers pose as customer support staff of a blockchain marketplace and try to lure unsuspecting buyers into giving them their private keys in exchange for a certain amount of cryptocurrency. Once they have these credentials, they then dump the assets. This is a typical pump and dump scam that happens frequently. Be very cautious of scammers, and be wary of the NFT.
The best way to avoid these schemes is to learn about NFT before investing. NFT has a reputation for being volatile, so you should only invest in projects with a proven track record. This will reduce the likelihood of getting scammed. Listed below are some tips to avoid pump and dump scams in the NFT:
Another common NFT scam is the “speculation” scheme, which involves buying a large number of NFTs and reselling them at a higher price. The aim of this scheme is to artificially increase the price of the NFT, thus increasing the profit on reselling. This scheme is often validated by social media influencers, which will then share the NFT on their own platforms.
Bidding scams are another common NFT scam. These typically occur in the secondary market, where the scammer will bid high and switch out to a lower value cryptocurrency. As a result, investors are able to lose money. To avoid a bidding scam, double check the currency you are investing in and make sure you do not accept bids below your maximum limit. The best way to avoid such scams is to check the currency before entering a transaction.
Impersonating customer service
One of the most convincing tactics that hackers use to steal NFTs is the act of impersonating customer support at popular platforms to gain access to crypto wallets. In this example, a hacker posed as the customer support team for the OpenSea cryptocurrency exchange and asked a victim for his or her private account information. The victim then lost four high-value tokens – BAYC, BTC, and ETH.
Another common scam involves impersonating customer support representatives from NFT marketplaces. The scammer will send a fake link to a website that appears to be a genuine NFT marketplace and will ask for your private wallet keys in exchange for USDC. Be sure to investigate any person who claims to be the customer support agent. Another common scam involves impersonating the NFT creator or customer support representatives.
Another common NFT scam is a phishing email. These emails pretend to be from legitimate NFT trading platforms and ask the victim to follow a link to claim free NFT. The scammers will then copy their victims’ account details and access their NFT collection. Another common scam involves impersonating an NFT trading platform. The fraudster will then use the information gathered by the victim’s account to obtain access to their cryptocurrency wallets.
Another scam involves developers who hype an NFT and then pull out. Typically, these scammers use social media to build trust and then wait until substantial funds pour in. Once they’ve managed to gather enough money, they will shut down the project altogether. These scammers can steal up to $1.2 million from unsuspecting investors. They’ll even disappear with the money. A widespread scam in the NFT world involves the rug pull scam. In fact, during the 2021 NFT drops alone, $30M will be lost through rug pull scams.
Rug pull scam
Many people are familiar with rug pull scams, which are common with cryptocurrencies and NFTs. These scams occur when creators abruptly abandon their asset, resulting in a huge loss for investors. The scammer snatches up the profits of the asset before it sells out, and then disappears without leaving any warning signs. While this type of scam might be convincing at first, it is a red flag.
Rug pull scams aren’t limited to the NFT domain, but they are becoming more common as the number of new users and beginners increases. As a result, it is important to be informed about these scams, including the rug pull. Here are some red flags to look for:
Ambitious roadmaps are an indicator of questionable projects. Rug pull schemes usually make ambitious goals and fail to follow through. While ambitious roadmaps look good on paper, they are hard to achieve. Instead, look for realistic, scalable goals that will ensure success. If the project is credible, it should have a long track record and established company behind it. It should also be backed by a reputable third party.
While the Frosties project was the first NFT rug pull of 2022, it has since become the latest. It was a rug pull scam, involving the abrupt shutdown of a project and stealing $1.1 million from investors. As a result, the Frosties scam contributed to the growing number of NFT scams in the crypto market over the past year. While these scams can be a nuisance, they are still important to keep an eye out for.
The developers of NFTs often promise to donate the proceeds to charities but simply take the money. While this practice isn’t illegal, it is unethical. Recently, scammers in Solana made headlines with their largest NFT rug pull ever. The scammers stole 9,136 SOL, about $1.3 million in value at the time. The scammers claimed that they were minting “Big Daddy Ape Club” NFTs, but the creator was able to abscond with the funds.