As NFTs become more publicly visible and popular, they have become a target for theft all over the world. From everyday people being targeted by phishing schemes to even celebrities, many people have had their NFTs stolen and unfortunately, this shows no signs of stopping.
But while we know that NFTs get stolen, we might underestimate just how much money is lost to NFT theft. Well, cryptocurrency analytics firm Elliptic has published a report that shows that over $100 million was lost from July 2021 to now due to NFT thefts.
The Report Findings
In the report, Elliptic gave some details as to the prevalence of NFT theft and how they operate. For example, the average NFT scam has been found to bring in around $300,000, making them very profitable.
At the same time, some NFT scams have proven to be particularly profitable, with CryptoPunk #4324 being sold for around $490,000 by its thieves shortly after it was stolen. Another heist was able to steal 16 Blue-chip NFTs to the tune of $2.1 million in December 2021.
With this, a clear pattern can be seen of blue-chip NFTs being especially targeted by thieves. In fact, the report says that certain blue-chip NFTs have even been stolen more than once.
“Emphasising the persisting problem of scams, assets #9650 and #5759 in the CloneX collection have been stolen twice in the space of three months – in two unrelated scam incidents – having been worth around $50,000 on both occasions,” the report says.
And after these scams are completed, the criminals have been known to use token mixers which make it harder to track where their proceeds go to. Tornado Cash, in particular, was found to have been used by about 52% of scammers to launder their funds.
The platform has since been sanctioned by the US Office of Foreign Assets Control in August 2022. In terms of how these scams are perpetrated, Elliptic uncovered several methods.
These include traditional phishing scams, trojan horses (in which tokens with ‘booby traps’ are circulated), fake swaps, and so on. Even more creatively, some scammers go as far as paying for ads.
“Scammers have also been known to pay to advertise their sites on search engines, meaning that unwitting individuals searching for the impersonated NFT platform will see a host of phishing links at the top of their search results,” the report notes.
The Cost of Stealing
As the report shows, NFT theft has a significant impact on the industry and those within it. From the millions being lost to thieves to the eventual involvement of regulators, these activities going unchecked will have negative effects on the space in the long term.
Since the thieves themselves aren’t going to stop targeting NFTs, it is up to others in the industry to put more frameworks in place to secure assets for users and make sure that the amounts lost to thefts do not continue to rise.