Scams remain rife in NFT market; tokens worth $100 million stolen in past year

Blockchain research firm Elliptic said that thieves stole over $100 million worth of non-fungible tokens (NFTs) in the year to July.

The blockchain-based assets, which can be transferred by the owner, represent digital files, and cover anything from avatars in computer games to million-dollar cartoon apes.

From wash trading to counterfeit works, the NFT sector is replete with scams as the fast-emerging digital asset became a new front in crypto's hacking problem.

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It comes after NFT prices and sales volumes plunged since cryptocurrency prices crashed in May and June this year.

With July seeing the highest number of NFTs reported stolen on record, scams remain rife in the NFT market even as it declines.

Accounting for 23 per cent of NFT thefts in 2022, security compromises via social media have surged, according to London-based Elliptic.

Given that not all crimes are publicly reported, the true scale of NFT thefts is likely to be even higher.

While regulators around the world are increasingly concerned about the use of crypto assets in cyber crime, hacks and scams have long plagued the crypto industry.

The report stated that almost $329 million worth of funds in the NFT market came from services such as so-called cryptocurrency mixers.

Before it was sanctioned by the United States this month, Tornado Cash was used for laundering just over half of the proceeds of NFT scams as it was designed to hide the funds' origin.

(With inputs from agencies)

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