NFTs have taken the digital world by storm, but unfortunately, scammers are always looking for ways to exploit the hype. In this article, we’ll look at five common NFT scams you need to watch out for. From phishing cons to fake NFT projects and plagiarized tokens, these scams can cost you a fortune. Read on to learn how to protect your NFT investments.
1. Rug-Pull Scams
One of the most prevalent NFT scams is the rug pull. This type of scam involves hyping an NFT project to attract investors’ funds, only for the developers to shut down the project and disappear with the money. Scammers often use social media to build hype and trust around their NFT project. The Frosties NFT rug-pull operated by Ethan Nguyen and Andre Llacuna is a classic example of this type of scam, where they vanished with over $1.3 million from investors.
2. Phishing Scams
Phishing scams are another common type of NFT fraud. Hackers use fake links, emails, and social media channels to trick NFT holders into giving out their private wallet key. Once the scammers have access to your NFT account, they can quickly drain your funds without your knowledge. In February 2022, OpenSea users fell victim to a phishing scam, with scammers making off with nearly $1.7 million worth of NFTs.
3. Bidding Scams
Bidding scams occur when scammers try to trick NFT sellers into accepting lower amounts for their tokens than agreed. For instance, a scammer could bid 20 Ether for an NFT and then switch the payment to a less valuable cryptocurrency without the seller’s knowledge. To avoid this type of scam, always double-check the payment currency before accepting an offer.
4. Pump-and-Dump Schemes
Pump-and-dump schemes are a type of market manipulation that involves artificially inflating an NFT’s price through misleading information and celebrity endorsements. Once the price goes up, the fraudsters sell their NFTs and leave investors with worthless assets. To avoid this scam, research an NFT project before investing and don’t be swayed by hype or celebrity endorsements.
5. Plagiarized NFTs
Plagiarism is rampant in the NFT world, with many tokens being copied and sold as original works. OpenSea reported that over 80% of NFTs minted with its tool were fake. To avoid buying a plagiarized NFT, always verify its authenticity before investing. Check the seller’s history and social media profiles to confirm the artwork’s originality.
NFT scams can be devastating, but by following the tips above, you can protect yourself from fraudsters looking to make a quick buck. Always do your research, double-check payment details, and verify the authenticity of an NFT before investing. Stay vigilant and keep your NFT investments safe.
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