Over $100M in NFTs Have Been Stolen Via Scams in the Past Year: Elliptic
- The report noted that over $100 million worth of NFTs were publicly reported as stolen through scams between July 2021 and July 2022, netting perpetrators $300,000 per scam on average.
- Tornado Cash, a US-sanctioned crypto mixer, reportedly enabled around $137.6 million of crypto assets processed by NFT marketplaces.
- July 2022 saw over 4,600 NFTs stolen – the highest month on record.
A new report by Elliptic has delved deep into the state of the non-fungible token (NFTs) market in the past year. Notably, the report narrowed down to the financial crimes associated with the NFTs between July 2021 and July 2022. After all, over $8 million of illicit funds has been laundered through NFT-based platforms since 2017, thereby representing 0.02 percent of trading activity originating from known sources.
According to Elliptic, approximately $328.6 million, representing 0.81 percent of NFTs trading volume, originates from obfuscation services such as crypto mixers.
For instance, Tornado Cash, a US-sanctioned crypto mixer, reportedly enabled around $137.6 million of crypto assets processed by NFT marketplaces. Additionally, the platform was the laundering tool of choice for 52 percent of NFT scam proceeds before being sanctioned by OFAC in August 2022.
The report noted that over $100 million worth of NFTs were publicly reported as stolen through scams between July 2021 and July 2022, netting perpetrators $300,000 per scam on average. July 2022 saw over 4,600 NFTs stolen – the highest month on record – indicating that scams have not abated despite the crypto bear market.
Further Notes on Reported NFTs Illicit Activity
Although crime represents a small proportion of overall NFT trading, it has a disproportionate impact on the industry’s reputation and undermines the quality of experience of legitimate users. Moreover, the NFT market is very young and requires more investors to support content creators in the long run.
According to Elliptic, the month of May saw the highest confirmed value of NFTs stolen through scams, at just under $24 million. However, actual numbers are likely to be higher, as thefts are not always publicly reported.
Notably, social media compromises – particularly of NFT project Discord servers – have surged in 2022, accounting for 23 percent of all NFTs, close to 5,000 assets worth around $20 million, stolen this year. Reportedly, the growing availability of tailored malware that can bypass multi-factor authentication is likely to be partially responsible.
Elliptic noted that there is a growing threat to NFT-based services from sanctioned entities and state-sponsored exploits. This has been emphasized by the $540 million heist from Axie Infinity’s Ronin Bridge by North Korea’s Lazarus Group, and the possession of NFTs by the US-sanctioned Chatex cryptocurrency exchange. Reportedly, digital assets worth more than $160,000 originating from sanctioned entities have been used to purchase NFTs.
The NFT market has attracted institutional investors seeking to connect them with real-world markets including the luxury industry. Hereby attracting all types of traders. However, Elliptic advised traders not to fall under NFT FOMOs to avoid being victims of scams.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
