NFTs Scams are getting serious Day by day!
By their nature, NFTs are about the easiest form of investment (or at least potential investment) to create and offer for sale. For a few hundred dollars or less, one can “mint” an NFT. You can post it for sale on one of the more than two dozen online marketplaces. NFTs can be anything!
Digital assets such as graphic art are probably the most common assets. However, even physical items can be sell out.
For instance, Wall Street Journal reporter Joanna Stern produced an NFT of her 4-year-old’s artwork in December 2021 and made a video of how she did it.
In today’s era, the real art world, you, therefore, get everything from graphic masterpieces by well-known artists to pure junk from aspiring wannabes. But NFTs take things further than that. Graphic art is easy and can be
As a result, where we might have once purchased a limited edition print with a maximum of 150 copies made. We now have themed NFT collections with 10,000 originals like the Bored Ape Yacht Club (BAYC) series. Each was altered slightly enough by a computer program algorithm to justify being its own distinct NFT. So, while each NFT remains unique, they are literally being mass-produced.
To take it a step further, you can obtain a “mutant serum” that will alter your original bored ape image, creating a “mutant ape” with three levels of such serums. All this has spawned an offshoot of the BACY called the Mutant Ape Yacht Club (MAYC), which has 20,000 NFTs. This may be all fun and games. However, who knows what it’s doing to the value of your original image or your rights to the altered image. For now, it’s a big game, and there is a lot of money being thrown at it (the cheapest bored ape NFT reportedly goes for around $50K). Will the value hold up? You can decide. Meanwhile, these “collections” are growing like weeds.
Phishing– One of the NFTs Scam
This usually involves some sort of fraudulent enticement to part with your NFT, perhaps “offline,” to get a better price. Once you’ve relinquished your NFT, the Phish swims away.
Wash trades – These are essentially fake trades made between multiple accounts of the same person or a person and an accomplice. The perpetrator creates trades at successively higher prices to give the impression. Value is climbing in order to create FOMO (fear of missing out). The trades are real payments but they are going back and forth between the same person.
Since Jan. 11, for example, a particular “Meebit” NFT transacted over 100 times between just three wallets. Sales ranged between $3 and $15 million.
In Feb 2022, Crypto Research firm Chainalysis reported that “Wash traders made profits of more than $8.9 million in 2021 in the nascent, multi-billion-dollar space.” Many of the wash trades actually lose money as the owners pay more to themselves in each successive transaction. But then the eventual sale to an outsider results in a healthy profit overall.
Pump-and-dumps – P&Ds are just like their cousins in stock trading. An NFT or a collection of some kind is probably wash traded to show the appearance of new players jumping on). Once actual new buyers get sucked in, the originators sell out to them at inflated prices. When the price subsequently collapses, it looks like it simply fell out of favor.
Rug Pulls – Rug pulls are just what their name suggests. They are typically come-ons for a new concept involving NFTs scam for all kinds of creative purposes.
