The U.S. Federal Bureau of Investigation (FBI) has warned about a rising trend of digital currency scammers posing as non-fungible token (NFT) developers to target unsuspecting investors.
In a recent public service announcement, the FBI noted that the scammers lure investors by creating a false sense of urgency before draining their NFT accounts.
The scammers target victims through social media, where they hack into the accounts of popular NFT developers to push their scams, the FBI pointed out. In other cases, they create fake accounts identical to the legitimate developers.
“Fraudulent posts often aim to create a sense of urgency, using phrases like “limited supply,” and refer to the promotion as a “surprise” or previously unannounced mint,” the bureau stated.
Unsuspecting NFT owners who click on the phishing links are redirected to spoofed websites which mirror real NFT platforms. Once they connect their wallets to these websites to purchase the NFTs, the hackers link them to drainer smart contracts and wipe them clean.
The hackers usually turn to mixers and exchanges with lax KYC measures to launder their ill-gotten gains and obfuscate the path and destination of the assets.
The NFT sector continues to be a popular hunting ground for scammers. Between June 2021 and 2022, scammers stole over $100 million worth of NFTs, according to data from London-based blockchain analytics firm Elliptic.
With the NFT hype dying down this year, the scams have also dipped. In June, scammers stole $2.27 million in NFTs, down 23% from May—where they had made away with nearly $3 million. Data from analytics firm PeckShield revealed that over 85% of the stolen assets were sold on Blur, an NFT platform that launched last October.
NFTs look set to rebound as the industry moves toward utility over hype, and with the resurgence will come a rise in NFT scammers. The FBI urges the public to vet all NFT projects before making purchases, including probing the legitimacy of the developers and their social media accounts.
Additionally, investors should be cautious of projects that create a sense of urgency through surprise time-limited opportunities.
“Vet any opportunity that offers NFTs as a reward especially if it feels too good to be true,” the bureau says.
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