NFT Identity fraud

Over the past year(s), NFTs and the value of NFTs by well-known artists have soared in value. The total market for NFTs grew to over €40 billion by 2021! Thus attracting large auction houses like Sotheby's and Christie's, and wealthy celebrities who wanted to benefit from the growth. But as with all things, success also attracts unsavoury types of people who wish to profit from other people's works.

Scammers are active!

An imposter posing as street artist Banksy sold €800,000 worth of NFT artwork on the OpenSea platform before the real Banksy found out about the ruse and rang the bell. The artist revealed that he was not involved in the sale at all. The platform then banned the fraudulent seller, but claiming back lost funds is proving nearly impossible.

Protecting one's identity is very difficult in our digital world. NFT-platforms have a certain duty of care towards the customer and the artist. Within the ecosystem of the platform, only authentic art should be offered with the permission of the artist. Unfortunately, not every platform takes this seriously. On Opensea, about 80 percent of the NFTs offered for free turn out to be fraudulent or plagiarized to a greater or lesser degree! In addition, it can be difficult for a (novice) buyer to verify whether the offer is legitimate, and for artists, identity verification is virtually impossible to monitor. Identity fraud is therefore a persistent problem that also negatively affects trust in the entire sector.

Forging an NFT is still very easy at the moment. There is no authentication when minting an NFT and the anonymity of the holder of the digital wallet makes it very complicated and costly to detect fraud and to be able to bring it to trial. OpenSea came out with a statement after the revelations stating that: "it is against our policy to sell NFTs using plagiarized content." An immediate solution was not given.

A potentially revolutionary technology like blockchain needs to be well studied and so to be understood by experts. Nevertheless, people are also responsible for gaining knowledge themselves so that swindling becomes less easy. We believe that education about this new technology is of the utmost importance. Platforms and communities also have a role to play here.

In our opinion, prevention is better than cure. NFT platforms have a duty of care towards their customers and artists. It builds up trust among fans and enthusiasts if an NFT platform performs a thorough authentication of the identity of the person behind the offered artwork. Especially for inexperienced buyers and for artists without a strong social media presence, this is a blessing.

Tips to prevent scams:

1.Beware of airdrops and giveaways:

There are many airdrops and giveaways where you send a relatively small sum of money to an account only to receive back a multiple in a different (token) currency.

2. Check the price:

If the offer of an NFT on a site is much lower than that on legitimate websites, it is probably too good to be true and it is probably a scam.

3. Check the Ethereum 'contact address':

This should state where the NFT was minted. You can check the creator's website to make sure the information is genuine.

4. Beware of brand impersonation on social media:

Verify carefully that the customer service or official company is actually who it says it is.

5. Buy NFTs from a platform with verification of authenticity.