NFTs Dark Side: Scams and Rug Pulls and How You Can Be Safe

NFTs have taken the world by storm as it is a very lucrative industry. It’s so lucrative that OpenSea, one of the most popular marketplaces for NFT, reported in early 2022 to have registered over $2 billion in trading volume. So, there is no doubt people are making a lot of money making and trading NFTs.

As an investor, you need to be aware of the dark side scams of NFTs. But in every marketplace, there are bound to be mischievous people looking to scam unaware NFT enthusiasts. These scammers make up all sorts of shenanigans, all to scam investors of their money. Continue reading this article to enlighten yourself on the three dark sides to NFTs and how to stay safe.

Impersonating support services

When you are in the NFT space, one thing you should be cautious of is fake support service. Particularly when you are in a different NFT marketplace and seeking some kind of help from support on another platform. While you may try to get help from a community like Discord, which has become one of the largest hubs for NFT, you ought to be cautious of whom you trust.

There are legitimate members of communities like Discord who can help, but there are also scammers impersonating support services waiting for victims. These scammers often send private messages to victims seeking help and making them believe they can help. This help often seems innocent at first until they ask to share their screen or steal the private keys of their victim’s wallet. After that, they empty the user’s wallet, including their NFTs.

You can protect yourself from this by using a hardware wallet like the Prokey wallet, which makes it more difficult for scammers to remotely steal your funds, except if you purposefully send them to the scammers. Also, marketplaces like OpenSea implemented the SOS button, which allows users to lock their account when they suspect it has been compromised.

Building and promoting fraudulent projects

Another thing to be concerned about when it comes to NFTs is the fake promise of a reward scam. The concept is that scammers fake giveaways and promise users a reward only if they send a small amount as an investment. And, of course, they never fulfil the promise.

This side of the NFT scam takes more time to build as it requires an entire webpage design, but it is more difficult to spot the fraud. In some cases, the scammers may even replicate popular marketplaces like OpenSea or Rarible to steal users’ private keys.

These scammers may even go as far as making promises to design and mint new NFTs or even create a new game or DeFi platform just to get people to invest in the platform. And after getting enough money out of the project, they pull the rug and disappear without fulfilling the promise of a reward. Hence, to be on the safe side, it is essential to conduct a deep research before investing in any project.

Money laundering with NFTs

As you already know, several NFTs were sold for millions of dollars per piece. This raises the question of why it is so valuable. The truth is that NFTs are digital art pieces and are subjective to the value the buyer places on them. But sometimes, the value of an NFT is purposely made high to launder money. Someone looking to clean dirty money can purposely buy an NFT anonymously and purchase it for themselves from an anonymous source, and the money will be recognized as legitimate funds. A way to stay safe from users who buy and sell NFTs to launder money is to be registered on a platform with a verification process.

Conclusion

Summarily, trading NFTs is profitable, but you must be careful with who you trust and buy NFTs from. Also, ensure you perform due diligence and do in-depth research on any NFT investment scheme before joining. Doing these will help you stay safe while trading in the NFT marketplace.

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Blockchain and Cryptocurrency Security, Hardware Wallets, and Some Articles in Between!