In recent months, the popularity of NFTs has waned compared to their peak in 2021 and 2022. The decreasing popularity is also accompanied by a decline in fraudulent activities within the space.
The analysis said that scam incidents were more prevalent in May, with a record of $2.95 million worth of NFTs stolen. Peckshield reported that half of the stolen NFTs were allegedly sold on various marketplaces within three hours following the theft.
The marketplace Blur became a hotspot where approximately 86 percent of the stolen funds were sold. Another marketplace, OpenSea, also became a selling spot for around 13.76 percent of the stolen assets.
Several well-known NFT collections also experienced a decline in their floor prices. These include Azuki Elementals, Mutant Ape Yacht Club, Bored Ape Yacht Club (BAYC), DeGods and Otherdeed.
The declining floor prices create a perception that the current market conditions offer a golden opportunity to acquire numerous NFTs at significantly low prices. Crypto analyst Lookonchain reported that a pseudonymous whale named “Machi Big Brother” amassed 84 Azuki NFTs in a day, making the whale the second-largest holder.
NFT thefts peaked in February 2023, with a staggering $16.2 million worth of NFTs being pilfered. In the first half of the year, the total value of stolen NFTs amounted to almost $40 million.
Despite having fewer NFT scams than May, June ranked as the second-highest month this year regarding exploits within the digital asset industry. Fraudsters reportedly managed to steal over $92 million through 42 hacks.
July did not start well either, with the PolyNetwork experiencing its second exploit. On July 1, BeInCrypto reported that cyber-thief “Fake_Phishing182232,” managed to steal two BAYC NFTs. Shortly after carrying out the phishing attacks, the thief sold both NFTs for approximately 70 ETH on Blur.
PeckShield issued alerts to users regarding the theft of BAYC #8177 and #2330. Additionally, the cyber-criminal stole NFTs from the Mutant Ape Yacht Club, Bored Ape Kennel Club and Killabears collections.
Earlier this year, Nikhil Gopalani, the COO of crypto studio RTFKT, fell victim to a phishing attack. The incident caused him to experience a loss of NFTs worth $173,000 from his wallet. An investigation later revealed that Gopalani may have inadvertently disclosed private data to a hacker impersonating an Apple employee.
Nevertheless, the NFT market remains plagued by phishing attempts, scam projects, theft of NFTs, plagiarism, market manipulation and rug pull. Throughout 2022, NFTs valued at over $100 million were stolen.
Among the staggering number of NFT scams recorded this year, several types of scams are most commonly found.
A rug-pull scam is when developers overtly hype an NFT to gather significant funds from investors. After doing so, they abruptly pull out, shut down the project, and leave investors with losses.
Phishing scams are when hackers operate by gaining access to NFT account details. They frequently share falsified links through email or popular social media channels. Clicking on these links and entering personal information allows hackers to use keylogging or spyware to access and manipulate the NFT account.
Lastly, blatant plagiarism of NFTs. Plagiarism is prevalent on many NFT platforms since NFTs derive value from their unique digital tokens. Traders must exercise caution to avoid purchasing plagiarized NFTs. When buying a fake NFT, its value rapidly declines and soon becomes worthless.
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