How To Spot Them And Stay Clear

A lot has been written about scams and frauds in the cryptocurrency space. But with limited credible information and no regulations, the crypto market continues to be a hotspot of dubious activity. A Chainalysis report recently highlighted that Indians visited crypto scam sites over nine million times in 2021. Crypto scamsters have also started casting their nets wider and the latest to get trapped are investors in non-fungible tokens (NFTs).

Owning a digital piece of art or music is exciting, but losing hard-earned money is not. So, it may be time to keep aside the fear of missing out on the NFT mania and take a look at our quick guide on spotting and avoiding these scams.

Phishing and fake NFT site scams

The nascent NFT market has multiple websites and marketplaces. Many of these sites don’t have the brand recognition that popular websites for physical goods like Amazon have built over many years. And some of these NFT marketplaces are phishing sites where the scamsters create what looks like an authentic website to dupe visitors into sharing confidential details like their crypto wallet private key.

Once they get your private wallet information, they can steal all the cryptocurrencies you have stored in the wallet. Many of these sites also use attractive looking pop-ups offering discounts and freebies to lure people in.

What are some easy ways to avoid these NFT scams?

  • Never enter any personal information on pop-ups on any NFT website
  • Check if the contact address of the NFT aligns with that from its creator’s website
  • Use online tools line ScamAdviser and Trend Micro Check to see if the NFT website is genuine
  • Rug-pull and pump-and-dump schemes

    These are the most common scams that have grown alongside the rising craze for cryptocurrency. In both rug-pull and pump-and-dump schemes, the scamsters promote a new NFT project to draw attention and coax investors to participate in the project. As people buy the currency or NFTs of the project, the price spikes. The scamsters abruptly cash out and often completely pull out the currency from circulation, leaving holders of the NFT or currency with worthless assets.

    How do you avoid such scams?

  • Always check the history and wallet record of the NFT project before investing
  • Do your research on the project by visiting the project’s official channels on social media
  • Communicate with other investors of the projects on social media before putting any funds
  • Bidding scams

    These scams are exclusive to secondary NFT marketplaces and usually happen when you are trying to sell an NFT. In these kinds of scams, the bidder for you NFT may covertly change the cryptocurrency you have listed as your preferred means of exchange to another crypto that has a lower value. For example, you might have listed ether as the currency you want in exchange for the NFT, and the bidder may change it to ADA which has a lower value when converted into traditional fiat.

    How are such NFT scams avoidable?

  • Always double-check the currency you want to trade the NFT for
  • Never accept a bid that is lower than what you seek, in the secondary market.
  • Fake NFT support

    In this method, scamsters contact you as technical support staff on social media or messaging channels like Discord. They claim to be staff from official NFT marketplaces like OpenSea and try to persuade you into giving the security phrase for your wallet or any other vital credentials that can help them steal money from you.

    What are some ways to avoid this type of scams?

  • Never share your wallet credentials, even with official staff from a marketplace
  • If you are looking for technical support after buying an NFT, go to the official customer service on the website of the NFT marketplace.
  • Giveaways or airdrops

    Scamsters often disguise themselves as officials from an NFT marketplace and try to offer a lucrative fake giveaway or airdrop in the guise of promoting a project. Before providing you with the “free” asset, they ask for your wallet credentials to drain your wallet of any cryptocurrency or NFT associated with it.

    How do you stay safe?

  • Always remember the mantra–if it is too good to be true, then it probably is.
  • Do your research on the entity offering the giveaway
  • These are only some of the types of NFT frauds plaguing the internet. While there are specific instructions you can follow to avoid frauds, the ultimate advice is to do your research before investing in any NFT or cryptocurrency.

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