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    NFT fraud soars 400% in the UK for 2021 🀯

    As NFTs get mainstream, there has been a large increase in the number of noob investors. Fraudsters are taking advantage of these investors’ inexperience as they enter into this sector and we have seen an exponential increase in fraud cases.

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    With 10 cases reported in 2021, there has been an increase in non-fungible token (NFT) fraud in the UK, from 2 cases reported in 2020. This research was conducted by multinational law firm Pinsent Masons. However, it is believed that the number of NFT related frauds is likely to be far higher than the numbers reported to the police. A senior associate forensic accountant at Pinsent Masons, Hinesh Shah, stated that he expects frauds relating to NFTs to grow in an immense manner in the coming months, as the publicity surrounding them continues to attract inexperienced investors into the space.

    Shah said: β€œgenuine stories about the windfall profits individuals have made on NFT investments makes the more outlandish claims made by fraudsters, to lure investors, seem credible. Widespread media coverage of the NFT boom, like the cryptocurrency boom, is attracting consumers who have very little investment experience and therefore aren’t taking basic steps such as checking if an NFT is actually an NFT.”

    One of the easiest forms of NFT fraud is to sell fake or non-existent NFTs to the members of the public. Some of these fraudsters are making the NFT tokens from artworks they own no rights to, then they go ahead to sell them to buyers. This is a big challenge for the NFT platforms that that do not have the resources or personnel to cross reference NFTs with copyrighted existing artwork.

    Some other fraudsters are artificially boosting the value of an NFT token πŸ”₯


    The fraudster can then use this transaction history as β€œevidence” of an NFTs value to sell to an investor at an inflated price. According to blockchain analysis firm, Chainanalysis, scammers made $8.9 million last year from this β€œwash trading”. There was a case where an art collector was tricked into purchasing a non-existent Banksy NFT for Β£240,000 last year after a fraudster reportedly hacked the artist’s NFT page to insert a malicious link.

    A Pinsent Masons senior associate and civil fraud and asset recovery specialist, Jennifer Craven, argued that London is increasingly becoming a favoured spot and jurisdiction which NFT fraud claims can be made. NFT fraud is not seen as a priority by many enforcement agencies. Many fraudsters are located overseas which is an obstacle to track the fraud. The anonymous and decentralised nature of blockchain technology can make it difficult for buyers and investors to identify the seller of the NFT.

    Image source Joan Gamell

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    Zun Tsu
    Zun Tsuhttps://cointokenews.com/author/zun-tsu/
    NFT enthusiast. Writer. Journalist. Sharer of reliable and sourced news.
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