Brooklyn District Attorney Eric Gonzalez announced on Friday that he has shut down 40 websites involved in fake NFT markets. These scams specifically targeted artists and have resulted in multiple victims, including an 85-year-old Brooklyn painter who suffered a loss of over $135,000.
The scam artist contacted the 85-year-old artist through LinkedIn, posing as a dealer for a fake NFT market website called “OpenSea/Private Mint,” which closely resembled the real digital art market OpenSea based in New York City.
The fraudulent art dealer proposed to sell the victim’s artwork on the fake website in the form of NFTs or non-fungible tokens, which are digital artworks that can be sold and traded using cryptocurrency. The artist agreed to the transaction.
Subsequently, the scammer informed the artist that he had made over $300,000 from the website but needed a payment of over $135,000 to release the funds.
As a result, the painter emptied their retirement account, maxed out credit cards, and took out a loan to pay the $135,000. However, when the artist realized they never received the $300,000, the scheme was exposed.
The investigation by the prosecutor revealed that the victims’ funds were transferred multiple times and ultimately ended up in Nigeria, making it impossible to recover. Furthermore, the investigation uncovered other victims from Georgia and California and identified a network of false NFT sites targeting artists.
NFTs are digital collectibles, such as online artworks or items, verified for uniqueness through blockchain, with their value determined by rarity and demand, but the market carries high risks.
Prosecutor Eric Gonzalez stated, “Cryptocurrency scams can take various forms, but share similar characteristics like targeting vulnerable victims and requesting payment to redeem alleged profits. This was the strategy used in this case, leading our investigators to uncover a network of scams specifically targeting artists.”
Here are Prosecutor Eric Gonzalez’s recommendations: (1) Confirm Vendor Identity: Before engaging with individuals claiming to be NFT dealers or market representatives, verify their authenticity; (2) Choose Trusted Markets: Sell artworks only on established and trusted NFT platforms to avoid transactions with unknown websites; (3) Secure Cryptocurrency Wallets: Requests for mnemonic phrases may be fraudulent. Legitimate platforms do not require users to share wallet mnemonic phrases.
Finally, if it seems too good to be true, it likely is. Conduct your own investigations and seek advice from other artists.
In this operation, the Brooklyn District Attorney’s office seized 40 domain names of fraudulent NFT markets and redirected these websites to warning pages to prevent future victims. Prosecutor Eric Gonzalez said, “By shutting down these sites and raising awareness, we hope to protect more people from falling prey to similar scams.”