When Greed Meets Web3: How to Recognize Scams and Fake NFTs?

Galaxisxyz
6 min readMar 30, 2024

Since the big NFT hype, we’ve known that scammers soon see an opportunity to fraudulently acquire fans’ money with cunning tricks wherever famous artists or beloved athletes appear. Their methods have become more sophisticated, damaging the credibility of the blockchain and digital asset ecosystem while causing substantial financial harm to unwary victims.

Understanding the mechanics of scams and learning how to avoid them can equip users with the necessary knowledge to navigate these treacherous waters more securely. Regrettably, most scams still stem from human error or negligence. In crypto, an unsuspecting user can easily become a prime target. Exercising caution, treating unfamiliar service providers with skepticism, and steering clear of unsolicited contacts and proposals from strangers are prudent measures.

The Fake Artist and the Scam Buyer

Predominantly, scams exploit social engineering techniques. In these instances, scammers manipulate the user into relinquishing their wallet's control, facilitating easy theft.

Such scams may originate from a seemingly innocuous conversation or inquiry, where the user, enticed by the prospect of a favorable deal, naively clicks on a malicious link or visits an unverified website, inadvertently handing over their data and passwords to the scammers.

A prevalent scam involves impostors posing as NFT buyers on Instagram. Predictably, the transaction never comes to fruition, yet the seller is duped and defrauded through redirection to a counterfeit or imposter NFT platform.

The most widespread tactic recently has placed numerous artists and AI creators in precarious situations. Scammers target not just artists but also NFT enthusiasts and collectors, posing a constant threat.

Counterfeiting

Counterfeiting is the most frequent method employed. Although NFTs are designed to verify authenticity, counterfeit NFTs often appear indistinguishable from the genuine article at first glance. Capitalizing on the allure of profit, scammers might replicate iconic pieces from esteemed collections, attempting to sell them on reputable marketplaces.

Beyond peddling counterfeit or plagiarized NFTs, scammers might establish bogus NFT marketplaces or mimic popular ones to misappropriate assets. Vigilance and discerning use of web3’s capabilities are essential defenses against scammers’ tactics, emphasizing the importance of disregarding unknown requests and offers.

„NFT scams can happen to anyone, including experienced artists, collectors, and traders. Scammers are becoming increasingly sophisticated in their methods and are able to deceive even the most cautious individuals. They employ a range of tactics to gain the trust of individuals, such as imitating legitimate artists or crypto traders and manufacturing fake NFT trading platforms that look very real and authentic. They can also be very persuasive and convincing, making it hard for victims to recognize that they are being defrauded.”- writes artsartistsartwork.com in its article.

The Fake Banksy NFT

Perhaps the best-known of these scams was the fake Banksy NFT, which was offered for sale for 100 Ether. On the OpenSea website, the scammers put the NFT up for auction without the artist’s permission or consent. After a buyer paid for the artwork, the scammers simply disappeared. However, later, the hacker returned all the money except for the transaction fee.

Interesting note: the fake Banksy NFT is still on Opensea today, and its owner is selling it for 500 Ether.

Unfortunately, fraudsters are often willing to forge collections of well-known or famous people and companies, even for a small profit.

Encounters on Free Social Networks

Social media platforms like Instagram, Discord, Twitter, and Telegram offer more than just opportunities for new connections; they are hunting grounds for scammers. Often, through a friendly overture or a discussion based on shared interests, an initially harmless interaction can swiftly become perilous for one’s digital assets.

Curiosity and Greed

Scammers, promising enticing opportunities, typically prey on human curiosity or greed. Offers of free NFTs, high-value airdrops, or slots on whitelists for coveted collections continue to ensnare many users.

Unfortunately, these conversations usually lead to phishing sites, data snares, or malicious software lying in wait for the unwary.

Vigilant and Security-conscious Approach

Engaging with any links or attachments from such sources often results in compromised computers, theft, or extortion.

A vigilant, security-conscious approach significantly mitigates risks associated with digital tools. As technology advances, scammers’ tactics also do.

In addition to vigilance, it is crucial to secure our devices with robust security systems. Although most antivirus solutions now warn users about the most dangerous sites, fraudsters typically remain a step ahead, devising new schemes to hoodwink the unwary.

Actual data of 2024 Hacks
https://www.quillaudits.com/

Malicious Messages and Suspicious Emails

Even before the dawn of WEB3, internet users faced various attacks, with phishing and its derivatives being particularly rampant. This form of deception is especially malicious within today’s crypto sphere.

Scammers craft emails or messages that mimic legitimate platforms, tricking users into re-registering or clicking through, thereby exposing sensitive information, private keys, or login details. These deceptions can lead to the complete loss of a victim’s digital wallet contents.

Email spam filters catch only a fraction of these attempts, and the more cunning schemes can cause significant trouble. Despite repeated assurances from nearly every web3 service that administrators will never request passwords or login information, many users still fall prey to these scams and lose data and virtual assets.

“Employ email security solutions that incorporate antiphishing technology, capable of protecting against business email compromise (BEC) through AI detection of unusual communication patterns and visual inspection of suspect URLs. Opt for products that also feature context-aware banners to bolster security awareness training.” — Gartner, “Market Guide to Email Security”
https://perception-point.io/resources/report/gartner-market-guide-email-security-2023/

What should we do now?

On many free platforms, little prevents spammers and scammers from operating unchecked. The absence of personal identification and the prevalence of anonymous avatars allow scammers to operate incognito.

Verify Authenticity and Provenance

A familiar name doesn’t guarantee the authenticity of the individual behind it, a fact that is particularly true in the web3 domain, where avatars are commonplace. Use the power of the blockchain to track the history of an NFT. Confirm the original creator, track the ownership history, and be aware of NFTs without previous transaction history unless you mint them.

Practice Safe Wallet Management

Keep your digital assets safe in cold wallets, never ever give out your private keys or seed phrase, and be cautious of phishing websites that mimic legitimate wallet login pages. Always check URLs, domain names, and small details of the sites (design, phrasing, functionalities).

Beware of Too-Good-To-Be-True Deals

When an offer seems too good to be true, remember it is not true. This is similar to e-commerce offers. When the price is way too low, there is something behind the scenes.

Educate Yourself Continuously

Unfortunately, as technology evolves, so do scamming techniques. Keep yourself updated so you have a better chance to spot red flags and avoid fraudulent schemes.

Disclaimer‌‌

For legal purposes, we have to include this disclaimer. Of course, this doesn’t mean we won’t do our absolute best to make every feature possible, but since this is new technology and a new legal territory, we need to ensure that the terms and conditions are in order.‌‌

Galaxis / Ether Cards makes no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information in any posts.

Any assumptions, opinions, and details expressed in any Galaxis / Ether Cards blog or community posts constitute Galaxis / Ether Card’s judgement as of the date hereof and are subject to change without notice. Any projections or claims contained in the information are based on a number of assumptions, including, but not limited to, market conditions and the current status of Galaxis / Ether Cards, and there can be no guarantee that any projected outcomes will be achieved.‌‌

Galaxis / Ether Cards does not accept any liability for any direct, consequential, or other loss arising from reliance on the contents of the information in this post.

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