LImit Break’s CEO, Gabriel Leydon, is the latest victim of an NFT-related scam that fraudsters use to lure hapless victims. Here, we break down those scams and how to avoid them.
Non-fungible tokens (NFTs) are booming despite the so-called bear market, and rightfully so. After all, they provide an honest way for artists and content creators to sell their works and earn good money. However, the lure of a windfall also brought scammers out of their caves, thinking they could prey on people through NFT-related scams.
Just think about this statistic: in 2021, NFT trades reached a total of $17 billion, a 21,000% increase from 2020! That in itself is a testament to the appeal of NFTs. Unfortunately, this NFT boom attracted not only collectors, investors, and enthusiasts but also scammers.
These NFT-related scams can drain the NFTs from your wallets or make them lose their value in one fell swoop. You could even end up spending on an NFT, only to have it disappear before you can turn a profit.
Limit Break CEO Victim of NFT-Related Scam
Phishing and hacking are two NFT-related scams that could affect a person’s digital assets and reputation if nothing is done right away. Both can create a messy situation for someone trying to make an honest online living.
Take, for example, what happened to Gabriel Leydon earlier today. Leydon is a Web3 game designer and the CEO of Limit Break, a blockchain game company, and the DigiDaigaku NFT collection.
Leydon’s Twitter account was hacked by someone who tried to lure his followers into a fake whitelist giveaway. To take advantage of unsuspecting victims, the hacker posing as Leydon said he was giving away 2,000 out of the 6,000 available whitelist spots.
To make it more realistic, the hacker attached a link that redirects victims to a fake website where their wallets would get drained of their assets. The phishing website’s link was “Villians-digidaigaku.com.” Leydon has been teasing a new collection called Villains these past few days, so the link might seem legitimate to collectors of Leydon’s NFTs.
Several personalities from several NFT communities banded together. They used their personal Twitter accounts to alert the public of the ongoing situation, advising them not to click on any links on Leydon’s account.
The scam tweets have since been deleted, and Leydon posted a voice message on Twitter saying he is now back in control of his account.
In a follow-up tweet, Leydon said he would be “back at it tomorrow with a vengeance.” He also informed anyone who wanted to join the whitelist for Villains that there was no link, and all they had to do was follow him and retweet.
Indeed, NFT-related scams don’t choose their victims. Whether you’re an established personality in the NFT space or a neophyte feeling your way through it, you can fall victim.
If you’re an NFT collector, you would want to know what these NFT-related scams are to stay one step ahead of scammers. So, we have put together some of the most common schemes that fraudsters use that you should know about.
Keep in Step with NFT-Related Scams
With a booming NFT market, scammers are finding innovative ways to scam NFT creators and collectors of their digital assets. That is, despite the overall state of the cryptocurrency industry.
The problem with NFT scams is that they are ever-evolving. So, the essential safeguards you probably know, such as protecting your password, performing due diligence before purchasing an NFT, or using a VPN service to anonymize and encrypt your traffic, may not be enough to protect your assets.
So, we are taking the lid off some of the most common NFT-related scams to try and explain how they work and what you can do to keep your NFTs safe.
Phishing is an old but popular scam that gets the better of most people. As seen from what happened with the Leydon situation, a phishing scam involves fake advertisements, announcements, pop-ups, emails, and even text messages that take people to a phony website.
Once a user is on the dubious webpage, it will request the user’s private wallet keys to gain access to their digital wallets. In Leydon’s case, the wallets were supposedly necessary for users to be included in a whitelist. In truth, though, once scammers get a hold of the wallet keys, they can drain it off any cryptocurrency or NFT collections it holds.
There are legitimate third-party marketplaces that facilitate safe and secure NFT transactions, like OpenSea. Still, fraudsters can dupe users with imitation marketplaces with similar URLs. Since an NFT’s visible component can be easily copied and there is some plaintext information, it can be difficult to tell these impostor websites apart from legitimate marketplaces.
Here, scammers promote a fake NFT project or collection with promises of immense monetary benefits for buyers. Buyers wouldn’t think the NFTs are fake because these scammers hype the assets on social media. Then, after buyers purchase the NFTs, it’s as if a rug has been pulled under them because all the hype and unfulfilled promises vanish. The value of the NFTs drops significantly, and the scammers likewise remove the ability to sell the NFTs.
Scammers leverage social media to promote supposed NFT giveaways. They will ask users to spread the word to their friends or sign up on their websites in exchange for free NFT. Then, when it’s time to collect the prize, the scammers will ask for the wallet address to “airdrop” the NFT. Nevertheless, instead of airdropping the NFT, they will access the wallet and take any cryptocurrency or NFTs in the wallet.
There is always a cloak of anonymity among people selling or buying NFTs; thus, it is easier to create investment scams. False actors will make a project look worth investing in, but once they collect the money, they vanish into thin air.
Scammers would steal or duplicate artwork and list it on legitimate marketplaces like OpenSea. However, since the artwork is counterfeit, the NFT has no value. It might be too late before the buyer realizes he purchased a counterfeit NFT.
Avoiding NFT-Related Scams
Most NFT-related scams are after buyers’ wallet information, while some push buyers into purchasing counterfeit NFTs. So, as a collector, how can you avoid these NFT-related scams?
- Keep your wallet keys private. Never share the information with anyone, not even your closest pal. You should be the only one privy to the keys and any recovery codes. These codes are no one else’s business but yours.
- Do your assignment. Research the NFT seller by reviewing his account and checking for the blue check verifying his account’s legitimacy. Always do that before purchasing NFTs. If possible, research the seller’s social media accounts, online reviews, and other listings from this seller.
- Due diligence. Review an NFT’s transaction history before sealing the deal. If all transactions for a particular NFT were done in one day, stay away from it.
- Refrain from clicking suspicious attachments or links. It can still be fake even if it appears to be going to a legitimate site. Always visit a site directly and never click on any links unless you know this link by heart.
- Cross-check NFT prices. It might be additional work, but make it a habit to check out various marketplaces before purchasing an NFT to see if the prices are similar. If the price of one appears lower or higher than those on legitimate sites, it’s most likely a scam.
- Use only reputable NFT exchange markets. Don’t be fooled by offers that sound too good to be true because they probably are. Some new marketplaces that are popping up offer minimal security. Stay away from those and stick to reputable exchange markets, such as OpenSea, Mintable, Rarible, and the like.
- Create strong passwords. We don’t know how else to emphasize this point. Activate two-factor authentication, and use facial recognition or fingerprints, as these make stealing your identity doubly tricky.
We hope the information we shared will help you avoid and not fall prey to NFT-related scams.
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