NFT Scams
Non-Fungible Tokens (or NFTs) have been taking the internet by storm. They can be anything but those in the form of digital art pieces have become a prime target for scammers. Since most people don’t know a ton about NFTs and this emerging market they can easily be taken for a ride.
Non-Fungible Tokens
I know that just saying that NFT stands for non-fungible token makes nothing clearer so I will break it down. Tbh I had to do a bunch of research to understand this so we’re all in the same boat.
Basically, the fact that it’s non-fungible means that the artwork (or token) is one of a kind, unique, and can’t be replaced by something else. So, for example, a bitcoin is fungible because you can trade one bitcoin for another and receive the exact same thing back. A one of a kind trading card, however, is non-fungible because you’d never be able to replace it or trade it for something the exact same. Does that make sense? I hope so.
As I said in the introduction, an NFT can really be anything, a work of art, a piece of music, an item from a video game, literally anything you could think of, but the most noise is currently around these digital art pieces, which again could be anything from photography to drawing to paintings, to digital rendering, if you can imagine it I’m sure it exists. Here are some fun examples and the prices they sold for:
I’m not going to really going to get into the specifics around how these work, I tried reading about it and as soon as I saw the words blockchain or cryptocurrency I was like yeahhhhhh I’m out. What you need to know is that people are hoping this is going to become a new form of art collecting. But, of course, it’s super weird to buy something for a lot of money when there can be tons of digital copies and other people can download it for free but you have to think about it the same way you’d think about buying an original piece of art vs. a print. Everyone could get a Monet print for pretty cheap but only one person can own the original. So if you buy an NFT, you own the original digital artwork, the artist retains copyright and reproduction rights like they would with a physical artwork, and other people online can own copies that are free or significantly less expensive.
The other thing that’s mind boggling NFTs is why people pay so much for them. As you saw above, literally into the millions of dollars. Who are these buyers and why do they collect NFTs but also who are the artists, what’s the appeal for both sides?? For artists, the answer is more straightforward, NFTs provide a place for you to sell your work that there otherwise may not be a huge market for. NFTs will also pay the artist a percentage every time the work is sold or changes hands meaning that if it gets super popular and spikes in value the artist sees some of that which is nice.
For buyers/collectors, it can be a little more complicated. There are a few reasons to buy, aside from being super-rich and just flexing that you can. One is that it allows you to financially support artists that you like, two is that it gives you bragging rights for owning the original, and three is that, like any speculative asset, you hope that it goes up in value and you can sell it later for a profit.
I think that’s basically all you have to know. There is so much more about NFTs out there so if you’re interested the internet is your oyster.
So How Do You Use NFTs for Scamming?
It might seem like it would be really hard to scam people because the types of people buying NFTs and digital art are pretty tech-savvy and know what they’re doing, or at least that’s what I thought. But there are more and more instances where even those who are in the NFT world and know a lot are getting taken for a ride.
There are a few different ways of getting scammed, especially if you’re the buyer, like paying for something and never receiving it, paying for something that isn’t what the seller claimed it was, links that say they’re one thing but actually end up stealing buyers private keys to previously purchased NFTs, people pretending to be customer support and stealing the files from your computer, and more. For artists and sellers, there are different ways to get scammed too but the most common is having your work appropriated without your knowledge or consent.
I have two pretty interesting examples of this.
The first is honestly a crazy story, apologies in advance this one might get confusing. A collector of NFTs who goes by the name of Pranksy was on Discord when he saw a link to an NFT auction going on for one of Banksy’s works. He clicked the link and it took him to the official Banksy site so that all seemed legit. The piece isn’t super reminiscent of other Banksy work, see for yourself below, but it was on the official website so Pranksy placed a bid of 100 Ethereum (a cryptocurrency) which translates to $300,000. Less than an hour later Pranksy received a notification that the seller had accepted his bid but this made him suspicious that the whole thing was a scam because that didn’t seem like enough money. On top of this, the link was removed from the Banksy site and the official Banksy spokesperson made a statement saying that there weren’t any NFTs associated with the artist at all. Basically confirming that Pranksy had been scammed.
But then Pranksy checked his Ethereum wallet and realized that all 100 ETH had been deposited back to him with no note. This is definitely not the norm, the way the system is set up, once you pay it is basically impossible to get the money back unless the hacker decides to send it back to you. Which, naturally, they rarely decide to do. Of course, there have been accusations against Pranksy saying that the whole thing was, well, a prank. He denies this saying that he would never want to risk a future relationship with Banksy. People were also able to see the transaction when the money was returned from the hacker’s wallet to Pranksy’s, although this could have been faked too I guess.
It could truly be anyone who pulled this off and because they didn’t leave a note or any kind of communication we truly have no idea what their motives are. Weird.
The second is a little sadder but it’s from the artist’s perspective. Canadian artist Qing Han, who goes by Qinni online, rose to fame in late 2019/early 2020 with her illustrations. Her fans loved how detailed her work was and the vivid colours. Sadly, it was around this same time that Qing was diagnosed with stage 4 cancer and in February 2020 she died from it. She created many of her most famous works while she was in the hospital and receiving treatment for her cancer.
Less than a year after her death, in April 2021, a friend contacted Qing’s brother, Ze, to let him know that someone was stealing his sister’s identity to sell NFTs of her artwork. They were listing her illustrations on an NFT app called Twinci and profiting off her work. Ze was outraged but also felt powerless because there wasn’t a lot he could do so he emailed Twinci and reported this fraudulent account selling Qing’s illustration. The fake NFT ended up being removed and Twinci said that they always investigate claims like this and if the seller cannot prove that the artwork is an original of theirs the listing gets removed and their account is banned. However, this one account was just the tip of the iceberg. On Twinci alone there are five other listings with Qing’s art, some being listed for as much as $800. Obviously, this is a particularly disgusting example but it is unfortunately not an isolated incident and lots of other artists have to deal with their work being stolen as well.
This all just goes to show how much of a wild west mentality there is in this new, emerging sector and just how much even tech-savvy people don’t know or can’t verify. There has been increasing pressure on platforms like Twinci to implement safeguards to make it harder for fraudulent listings and scammers to create accounts and try to sell things in the first place. On the artists’ side, they have to monitor their own work and continually sweep for any instances of theft. Of course, this is not sustainable or reasonable since they can’t possibly catch everything. Ze is very aware of this and says that “I can do the best I could do to address the art theft, but I can't invest too much of my energy into it because much of it is out of my control” (Kwan, 2021).
So it’s looking like this is going to be part of the next evolution of buying and selling NFTs and the platforms that allow this, reducing fraud and scammers. This will benefit the platforms too because more people will use your platform if you’re able to prevent scams and theft as much as possible. This is definitely food for thought as art moves more and more into the digital realm. It opens doors for all different kinds of art heists, thefts, forgeries, scams and more.
Works Cited
Clark, Mitchell. “Someone Paid More Than $300k for a Fake Banksy NFT - and the Scammer Gave it all Back”. The Verge. 2021. https://www.theverge.com/2021/8/31/22650594/banksy-nft-scam-pranksy-ethereum-returned-duplicates-art
Clark, Mitchell. “NFTs, Explained”. The Verge. 2021. https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq
Kwan, Jacklin. “An Artist Died. Then Thieves Made NFTs of Her Work”. Wired. 2021. https://www.wired.co.uk/article/nft-fraud-qinni-art