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NFT scams hit record high: More than $100M stolen in one year

 


According to a report by blockchain analytics firm Elliptic, criminals stole over $100 million worth of NFTs between July 2021 and July 2022 .


In May 2022, the total value stolen by NFT scams hit a new record of nearly $24 million.


NFT Scams: Social media is a popular target

Elliptic's research found that the number of NFT scams on social media, particularly on Discord servers, has skyrocketed in 2022. 23% of all NFTs stolen in the last 12 months (around 5000 NFTs) were stolen via social media platforms. The combined value of these NFTs is approximately $20 million.


"The growing availability of customized malware capable of bypassing multifactor authentication is likely to be partly to blame," the analysts said.


According to the report, the actual numbers are likely higher because NFT thefts are not always public knowledge.


NFT trading volume skyrocketed in the summer of 2021. Average daily sales exceeded $50 million in 2021 and annual NFT sales exceeded $17.7 billion (an increase of over 200% from 2020).


Experts also predict an ever broader scope for NFTs as the gaming and metaverse markets continue to evolve.


Crypto Mixers and Money Laundering with NFTs

Blockchain intelligence firm TRM investigated the NFT thefts linked to Discord. Analysts at the company wrote :


“It's like classic scams . Once a community of criminal actors or scam-as-a-service operators understand the basic mechanisms from deception to execution, they can scale by reusing and iterating these techniques ."


State-sponsored malware and state-authorized entities are now seen as a growing threat to NFT-based services. An example of this is the theft of the $540 million from the Ronin bridge Axie Infinitys . North Korea’s Lazarus Group was responsible for this, using NFTs on US-licensed crypto exchange Chatex.


We previously reported that North Korean hackers are posing as applicants for crypto jobs in wealthy countries. With these jobs, the criminals want to finance government business. Furthermore, the hackers of the 620 million hack of Axie Infinity's Ronin sidechain used permissionless crypto mixers . The parties involved laundered the stolen funds.


Additionally, $137.6 million worth of crypto assets were laundered from NFT marketplaces via crypto mixer Tornado Cash . Crypto-Tumbler, now banned by the Office of Foreign Assets Control (OFAC), has been the most popular service to date for obfuscating money transactions linked to NFT scams. 5 2% of all funds related to NFT thefts went through Tornado Cash.


Tornado Cash ban made headlines in crypto space. Vitalik Buterin defended the Ethereum-based crypto mixer. Other members of the crypto community also spoke out against the ban on crypto mixers .


Disclaimer

All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action taken by the reader based on the information found on our website is entirely at their own risk.

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