New reports reveal that hackers and notorious cybercriminals have stolen more than $100 million worth of non-fungible tokens (NFTs) this year up to July, making the nascent crypto sector the new front in cyber hacking.
According to an Elliptic report published on August 24, scammers had stolen more than $100 million of NFTs this year as of July. Elliptic is a blockchain research firm dedicated to making cryptocurrency transactions more transparent and accountable.
Digital collectibles (NFTs) are blockchain-powered assets representing digital files of images, video, and music. In 2021, their markets surged as many crypto-rich speculators spent billions hoping to generate a return from these digital assets.
Unfortunately, since the beginning of crypto winter in May and June, the market prices of NFTs have plunged, with some NFTs even shedding more than 60%. Despite the general crypto meltdown, cybercriminals have remained proactive in the NFT market. According to the new Elliptic report, July recorded the highest number of NFT scams reported in the short history of crypto.
Scammers Target NFT Social Media Platforms
The new report reveals that security breaches through various social media platforms have surged, accounting for 23% of NFT scams in 2022. In this case, the Bored Ape Yacht Club is a perfect example that suffered from a security breach on its social media discord servers in June. At the time, its user lost NFTs worth over 200 ETH in a phishing attack on its metaverse venture, Otherside.
Although the Elliptic reports have approximated an average of $300,000 per scam, the exact scale of NFT theft might be even higher, given that not all victims often report cyber crimes publicly. The London-based research firm has estimated the amount of money-laundering in NFT-based platforms at just $8 million. Surprisingly, almost $329,000 worth of funds in the NFT market came from crypto mixers.
What Are Crypto Mixers?
By description, crypto mixers are platforms that mash-up digital assets in private pools before transferring them to other designated wallets. The crypto mixer platforms are designed to hide the origin of funds.
Elliptic cited Tornado Cash as an example, linked to laundering just over half of the proceeds of NFT scams before being sanctioned by the United States this month. “There is a growing threat to NFT-based services from sanctioned entities and state-sponsored exploits,” Elliptic wrote, citing a $540 million theft that U.S. officials have linked to North Korea’s Lazarus Group in April.
Elsewhere, cyber crimes within the NFT space show no signs of slowing down, despite the recent general crypto markets downtrend. Earlier this week, developers behind SudoRare suddenly shut down all its services and social media platforms six hours after launch in yet another rug-pull scam. The scam event left users losing more than $800,000 worth of NFTs.
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