Exploring NFT Fraud: Taking Advantage of Pending Transactions and Mimicking Developers

Even with the NFT market in a slump, scammers continue to find avenues for illicit activities.

Recently, the United States Federal Bureau of Investigation (FBI) warned issued a warning about a rising trend in fraud where criminals impersonate NFT developers to pull off financial scams. These con artists often take a two-pronged approach: either hijacking the social media profiles of real developers or crafting fake accounts that closely resemble them.

These fraudsters go the extra mile by advertising fake NFT launches through aggressive marketing tactics, leveraging phrases that invoke urgency — terms like \"limited supply\" and \"exclusive drops\" are commonplace.

Once a victim makes an investment, the scammers lead them to fake websites through phishing links. These counterfeit sites often prompt victims to connect their cryptocurrency wallets to purchase assets, resulting in the unfortunate transfer of cryptocurrency and NFTs into the scammers' wallets, as explained by the FBI.

Discord channels dedicated to NFT collections have become a hotbed for fraudulent activities.

A Pudgy Penguins Discord This event shed light on a new deception strategy targeting NFT sellers in over-the-counter (OTC) transactions. The scam features a phony buyer who initiates a pending cryptocurrency transaction to pressure sellers into prematurely parting with their NFTs. Although the buyer's method appears convincing, the transaction ultimately fails, revealing a tactic that scammers exploit.

The Community Safety Lead for Pudgy Penguins, known on Twitter as TheChild, disclosed on X (formerly Twitter) that scammers initiate a cryptocurrency transaction, often in USDT, directed to the seller’s wallet. They tend to share transaction details to create a misleading impression of a completed payment.

Following this, the scammer applies psychological pressure, asking urgent questions like \"Did you receive the funds?\" — which insinuates doubts about the seller's urgency and nudges them to release their NFT before the transaction has conclusive proof.

These scammers usually recommend the Exodus wallet, misleadingly inflating portfolio values with pending transactions — highlighting a loophole that Exodus needs to address. Their manipulation of trust exposes how emotions can cloud judgment, leading sellers to make costly mistakes.

"It’s important to recognize that this scammer was active in our token-gated Discord channels. Just because someone holds an NFT from a respected collection doesn't guarantee they're trustworthy!\" TheChild emphasized on Twitter.

Security specialists stress the importance of ensuring OTC transactions align with the seller's conditions while exercising vigilance if the other party imposes specific requirements. Sellers should retain their NFTs until they securely confirm payment has been received. While quick transactions may seem enticing, established platforms offer a safer environment.

The Pudgy Penguins incident serves as a crucial reminder of the need for vigilance and due diligence to steer clear of scams.

Millions of Dollars in NFTs Stolen Each Month in 2023

NFT thefts in July 2023 amounted increased to $1.73 million in value, which represents a 31% decrease from June’s figure of $2.27 million. The peak theft this year occurred in February, soaring to $16.2 million, followed by March with $10.9 million in stolen assets. Notably, in January and February, 50% of the stolen NFTs found their way back onto OpenSea. As for June, over 80% of stolen assets were listed on Blur.

In July, 19.63% of NFT thefts originated from OpenSea, 20% from X2Y2, while a large majority, 67.3%, were taken from Blur—currently the leading platform in monthly NFT trading volume.

Stolen NFTs were swiftly resold across various marketplaces within an average of 165 minutes after the theft, according to insights from blockchain security firm PeckShield. reported by An Elliptic report highlights the rampant NFT thefts within the crypto community, noting that assets worth $100 million have been seized, with BAYC being the most targeted collection.

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