Phishing for NFTs
When anyone over 30 mentions ‘NFTs’ to a younger person, they tend to get a look of scorn or pity, with the assumption that the younger generation is hip to all that is blockchain, crypto, and Metaversey, but that is not always the case and in China, where the government’s efforts to slow or stifle the growth of cryptocurrencies and similar virtual financial products have met with modest success, even the younger generation is getting caught up in the new “Wild West” of the virtual world.
It seems that Niq Chen, a senior at Tongli University in Shanghai, told a group on Discord (pvt) that he had lost an NFT ‘object’ worth ~$48,000 through a scam. While the government has banned cryptocurrency trading and mining, the idea that one can get rich quickly with little physical effort seems to be appealing to those who are willing to chance the use of virtual currency and NFTs on platforms outside of China, such as OpenSea (pvt), which is not available on the Mainland. The platform is a repository for virtual collectibles, particularly artwork and ‘other stuff’ that can be viewed and purchased using virtual currency and NFTs.
While the site is careful to provide a list of partnered ‘wallet’ companies, a talented scam artist could spoof an e-mail to exhibitors or collectors, which is what happened to young Mr. Chen, who fell prey to such a scam and lost a good chunk of his NFT assets. He even tried to convince the buyer of his NFT that it was sold illegally and tried to buy it back, but the new holder refused saying that he did not want to lose the asset after getting such a good deal. Since the entire transaction, illegal or not, was done across blockchain, there is no way to change or cancel the transaction, nor did the buyer believe he did anything wrong, having purchased the asset at a discount, albeit from an illegitimate source. Hopefully the fact that OpenSea has frozen the asset while investigating will convince the new owner that it might be in his best interests to sell back the asset at cost.
One might expect that Mr. Chen would walk away from such an experience with an attitude that might preclude his expansion in the NFT world, but it seems not, as he has proclaimed that he will continue to pursue NFT art as a career path and states “I already cannot do without the community,” which would give a hint as to the real basis for such investing is in this case, companionship, with Discord having upwards of 150m monthly users. Mr. Chen is not alone in his partial misery, as only a week ago, 17 OpenSea users had NFT assets stolen in a similar phishing attack, netting the scammer ~$1.7m in Etherium crypto from the items that he has already sold and there have been numerous other scams that seem legitimate, but move assets out of their digital wallets to disappear into the ether.
A number of countries police crypto and NFT transactions to look for money laundering, which is ripe for abuse, but there are very few rules about crypto-fraud and we are constantly hearing of scammers who buy investor lists and call to promise a quick return on their investments and disappear with the proceeds after investments are made. This is still the very ‘Wild West’ and being such, even those who profess to be hip to crypto-jargon and the ways of NFTs are getting caught up in the scammers net, just like the old timers who used to buy penny stocks over the phone. The virtual world is shiny and new but has the same dark underbelly that “Mary from Amazon” touches on when she wants to make sure you actually purchased that iPhone 12, or the guy from “Credit Services” needs to ‘confirm’ your credit card account number. “There is no free lunch”[1]
[1] “The Moon is a Harsh Mistress” – Robert A. Heinlein - 6/2/1966
It seems that Niq Chen, a senior at Tongli University in Shanghai, told a group on Discord (pvt) that he had lost an NFT ‘object’ worth ~$48,000 through a scam. While the government has banned cryptocurrency trading and mining, the idea that one can get rich quickly with little physical effort seems to be appealing to those who are willing to chance the use of virtual currency and NFTs on platforms outside of China, such as OpenSea (pvt), which is not available on the Mainland. The platform is a repository for virtual collectibles, particularly artwork and ‘other stuff’ that can be viewed and purchased using virtual currency and NFTs.
While the site is careful to provide a list of partnered ‘wallet’ companies, a talented scam artist could spoof an e-mail to exhibitors or collectors, which is what happened to young Mr. Chen, who fell prey to such a scam and lost a good chunk of his NFT assets. He even tried to convince the buyer of his NFT that it was sold illegally and tried to buy it back, but the new holder refused saying that he did not want to lose the asset after getting such a good deal. Since the entire transaction, illegal or not, was done across blockchain, there is no way to change or cancel the transaction, nor did the buyer believe he did anything wrong, having purchased the asset at a discount, albeit from an illegitimate source. Hopefully the fact that OpenSea has frozen the asset while investigating will convince the new owner that it might be in his best interests to sell back the asset at cost.
One might expect that Mr. Chen would walk away from such an experience with an attitude that might preclude his expansion in the NFT world, but it seems not, as he has proclaimed that he will continue to pursue NFT art as a career path and states “I already cannot do without the community,” which would give a hint as to the real basis for such investing is in this case, companionship, with Discord having upwards of 150m monthly users. Mr. Chen is not alone in his partial misery, as only a week ago, 17 OpenSea users had NFT assets stolen in a similar phishing attack, netting the scammer ~$1.7m in Etherium crypto from the items that he has already sold and there have been numerous other scams that seem legitimate, but move assets out of their digital wallets to disappear into the ether.
A number of countries police crypto and NFT transactions to look for money laundering, which is ripe for abuse, but there are very few rules about crypto-fraud and we are constantly hearing of scammers who buy investor lists and call to promise a quick return on their investments and disappear with the proceeds after investments are made. This is still the very ‘Wild West’ and being such, even those who profess to be hip to crypto-jargon and the ways of NFTs are getting caught up in the scammers net, just like the old timers who used to buy penny stocks over the phone. The virtual world is shiny and new but has the same dark underbelly that “Mary from Amazon” touches on when she wants to make sure you actually purchased that iPhone 12, or the guy from “Credit Services” needs to ‘confirm’ your credit card account number. “There is no free lunch”[1]
[1] “The Moon is a Harsh Mistress” – Robert A. Heinlein - 6/2/1966
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