The Surging Struggle between Scams and Security

The NFT community continues to grow exponentially, with transactions being done in a matter of seconds. The convenience of acquiring such valuable digital assets has become a large, attractive target for scammers and those wishing to do others harm for personal gain. As a result, the rise of NFTs comes from the increase in security breaches. With cyberattacks such as hacking, identity theft, and ransomware at an all-time high, the world of cryptocurrency is at the crosshairs of it all.

Digital Money Heist

With the rise of both NFTs and the subsequent security challenges that come with it, let’s take a  look at some well-known crimes against digital creators, NFT traders, and the rest of the crypto community.

There are around 360,000 NFT wallet owners as of 2021¹ and 80% of them had the most digital collectibles—accounting for a total of $2.7M. 

NFT fraud and fakes (Rug pull scams)

Fake NFTs, stolen artworks, and various other schemes are prevalent within the community. One of the most common schemes involve scammers taking someone else’s artwork and selling it off as their own, robbing the creator of credit and the profit they could have made. 

Another example of NFT fraud is when startup ‘creators’ would solicit funds² from investors and vanish with the money, sometimes overnight, without even starting their projects.

In December 2021, Frosties NFT³ was gearing up for a big launch until investors were alerted that it could be a potential scam. The investors who forked over $500 received constant updates from the creators via their official social media channels until all communication ceased close to the big day. The scammers bagged $1.1M in the process.

Phishing

Earlier this year, several incidents of phishing have been reported, raising the alarm for more intensive security measures in the crypto space. The latest was a reported loss of $2.4 million worth of NFTs⁴, including the prized Bored Ape Yacht Club and the Mutant Ape Yacht Club, which was accomplished by scammers hacking directly into the Bored Ape Yacht Club’s Instagram account.

Vulnerable crypto wallets and identity theft

Identity theft and impersonation are also some of the biggest problems among creators. Bad actors pose as a “verified” account and coerce users into providing personal information to resolve a problem. Another tactic is to trick the user into downloading malware that would weaken and infect the device’s security measures, allowing attackers to access their digital wallets, information, and funds.

Intellectual property (IP) infringement

NFT platforms only allow original content. All creators are under copyright protection, including NFT artists. More so, buyers are not allowed⁵ to sell, reproduce, and alter the asset even if they have ownership of it. IP infringement happens when creators use copyrighted material when creating content. 

These security threats are the reasons why the NFT community—both artists and traders—and cryptocurrency trading platforms are always on the lookout for the best possible solution to protect their communities and their assets from security breaches and fraud attempts. This is where TaskUs steps in.

First-class safety and security with Us

With over 10 years of experience in the FinTech space, coupled with an intense focus on Crypto and NFT transaction monitoring over the past five years, TaskUs leverages the absolute best in people, processes, and technology to give our clients’ users a world-class, full 360-degree experience in the areas of security, accessibility, and CX.

Our expertly handled service offerings are:

• Fraud Prevention and Transaction Monitoring
• Identity Verification
• Anti-Money Laundering/Counter-Terrorism Financing
• Chargebacks Assistance
• Payment Screening
• IP Infringement
• Monitoring privacy and policies

When it comes to security, we will always be playing a cat and mouse game with the creativity and malice of bad players. It’s where TaskUs comes into play to help bridge the gap and to stay ahead of the curve by investing in human moderators and making use of innovative technologies to quash breaches quickly, and identify potential incidents before they happen.