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The growth of the NFT market and the emergence of new damages
NFT (Non-Fungible Token)
NFT stands for Non-Fungible Token, which means a token that represents a digital asset with uniqueness.
NFTs can be valued in almost every field that can digitalize assets, making them highly potential for growth. In fact, the trading volume of NFTs is rapidly increasing in the market.
However, as the trading volume increases, the number of damage cases also increases. Since there are no laws in place yet to protect NFT investors, it is currently the responsibility of investors to protect themselves.
As previously introduced, cases of scams and rug pulls are also increasing in the process of NFT trading, and new types of damage such as rug pulls are also occurring. Therefore, investors should be aware of the accident cases introduced below and be aware of prevention of damage.
NFT Fraund Type #1. Putpocket
The method, known as “putpocket,” is currently prevalent, not stealing someone else’s assets, but putting malware-laden NFTs into other people’s wallets.
“What? I have an NFT that I didn’t see in my wallet?”
If you find an NFT in your wallet that you did not purchase, you should always be suspicious. It could be a scam NFT that is disguised as a popular project, or a fake artwork made to look legitimate.
If you confirm an NFT in your wallet that you cannot trace the source of, your entire wallet may be hacked and other NFTs in your wallet may be stolen by the attacker.
“Free Airdrop?”
One of the rapidly increasing methods of harm is the distribution of scam NFTs through air drops. They will say that it's a marketing promotion, and that they are giving away free coins, tokens, or NFTs. They will then try to hack the user's wallet by planting malware in it. This type of scam is becoming increasingly common.
NFT Fraud Type #2. Price Unit Fraud
This is a method where the seller is deceived by manipulating the location of the decimal point, leading to the approval of the transaction.
“What? Someone wants to buy my artwork? Let's approve the deal!”
One of the common methods of fraud in the NFT market is the scam of offering a price that is significantly lower than the actual value of the NFT, by manipulating the decimal point.
For example, a scammer may offer 1.27 ETH for an NFT that is valued at 12.7 ETH. This is often done by using the "offer" feature on popular NFT marketplaces such as OpenSea, where buyers can propose a price for an NFT.
Even if the seller realizes their mistake after the deal is made, it is not possible to reverse the NFT contract, which is why it is important to carefully check the numbers before approving any deals.
NFT Fraud Type #3. Unauthorized Issuance of Counterfeits
There are cases where someone who does not have rights to a work, illicitly reproduce the work and issue NFTs without permission.
“My favorite company released an NFT project. I need to get one!”
Recently, there have been cases of unauthorized individuals using images without rights to produce and sell NFTs on markets like OpenSea.
For example, an NFT product using the character 'JRILLA' from the company Shinsegae Food was sold on OpenSea for 0.1 ETH. However, this NFT had no connection to Shinsegae and was made by someone who had illegally used their image. Shinsegae reported this to OpenSea and the product was removed from the market.
With the nature of digital art being easily copied and stolen, it is important to be aware of these cases, and to carefully check the authenticity of NFTs before purchasing, including the history of the transaction.
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