As the NFT market keeps growing, it is becoming highly lucrative for buyers and sellers across the world. It is providing major benefits to artists and celebrities and investors around the globe.
But, as the market is becoming more lucrative, the risks are growing.
Growing Risk Of Hacking And Phishing In NFT Market
Recently, one of the bored ape yacht club NFT owners, Tim Mckimmy was scammed off his token. He bought the bored ape token #3475 for $230,000. He bought the NFT from a seller, transferred the money, and received the Smart Contract. He used OpenSea hot wallets, one of the largest NFT exchanges.
After some time, a hacker hacked into his OpenSea account, sold the token to him for only 20 dollars. The token got transferred to the scammer’s account, and then he resold the token for $308,000. Tim sued OpenSea and asked for a compensation of 1 million dollars.
Last year in December, the art gallery owner Todd Kramer lost $2.2 million in an NFT scam. His hot wallet had 15 tokens that were stolen. One of the NFT stolen was the bored ape yacht club NFT. In total, he lost around 2.2 million dollars worth of NFT through the phishing scam.
All this has raised some major questions and doubts regarding the safety of the hot wallets that are internet-connected and allow storing cryptocurrency and NFT and collectibles. Also, as the world of NFT is becoming more open for all types of buyers and sellers, the risks are becoming quite predominant.
Phishing through hot wallets
One of the ways phishing scam is taking place these days is through hot wallets. These are online accounts based on browser extensions or crypto exchanges. Here, the users can store their cryptocurrency. And can access them online for trading purposes with much ease. But this ease has come with a new set of problems, which is phishing.
Hackers are using phishing links and ads that allow them to access hot wallets. This has made hot wallet hacks and scams quite common.
Cold wallets are hardware wallets that can help ward off hackers. But many don’t use them as they can decrease efficacy. They can be time-consuming and do not allow the user to access the cryptocurrency tokens instantly.
One of the popular platforms that are used these days in tandem with the NFT and crypto market is discord. This chat platform, allows the crypto communities and NFT buyers to talk amongst each other. Also, many NFT sellers create groups on discord servers to discuss NFT community developments, benefits, etc.
This has become another place for hackers to scam users. Many hackers are using links and other ads to scam the buyers from their cryptocurrency tokens.
The hacks and scams have risen drastically. In 2021, the criminal transactions in the cryptocurrency mounted to $14 million from $7 million in 2020.