Jun 16, 2022

Status Of NFT Scams to Watch Out For In 2022

The digital trading era is molding itself into numerous forms, right from the dawn of cryptocurrencies to taking shape as NFTs.

Status Of NFT Scams to Watch Out For In 2022

NFT Scams And Stumbling Figures

The sales figure at the start of the year 2022 stirred up the heat in the NFT sector, rising beyond $4 billion.

However, these numbers started dwindling so low that they reached $1.21 billion in April 2022. Security threats and lack of regulation attribute to the grave cause of the prevailing situation.

Events like rug pull, phishing links, pump and dumb, and others are the ways adopted by digital scammers to launder NFT assets. For better understanding, let’s have a rundown on variants of NFT scams in today’s times.

This blog brings to light the different scenarios of NFT thefts happening in the crypto space and the real-time instances of NFT scams.

Top Prevalent NFT Scams

Rug Pull

Rug pulls are most commonly observed in the overall crypto space. The owner or company creates hype around the NFTs, which routes to soaring prices. It is by which investors are convinced of the worth of NFTs and tend to buy those. Soon after that, the promoters stop backing up the assets, leaving the investors to bear the losses.

Records Of Rug Pull Events

“Evolved Apes,” a unique collection of 10, 000 apes designed to be deployed in battle, and on winning, the players were told they would be rewarded with Ether. Soon it was spotted that the developer absconded with 798 Ether or $3 million funds of the investors who bought the apes.

“Frosties” project comprising 8, 888 NFTs, each priced at approximately $130, was launched and got the eyes of the investors. But the project developers ran off after the sale of NFTs amounting to $1.1 million while dumping the investors without fulfilling the promise of making upgrades to Frosties in the future.

How To Avoid Rug Pull NFT Scam?

  1. Do thorough research diligently before investing in a project.
  2. Check if the marketplace is trustable and has good scope to buy and sell NFTs.
  3. Browse through the transaction history of the NFTs.
  4. Know the background of the developer of the project to confirm whether it comes from a genuine source.
  5. Have a track of any complaints that have ever been raised against the project.

Make sure you have undergone all these steps before investing in an NFT.

Pump and Dump

Pump and Dump are the next most obvious scam in washing out the funds of the investor. The project developers make a bulk purchase of NFTs and create a fake demand. This portrays the NFTs as well-performing ones in the market, fooling the investors into buying them. Once the prices are peaking, the scammers sell all those NFTs, which leads to a sudden downfall in prices and a loss for investors.

Record Of Pump And Dump Scam

“Squid,” a digital cryptocurrency launched by taking inspiration from Netflix’s Squid game series, was sold at sky-hitting prices of about $2, 860 per token. Until moments later, the creators have cashed out, stealing away $3 million. It was then found to be a pump and dump scam that has shaken the NFT investors.