I lost nearly $11,000 worth of NFTs, Here’s what I learned
Imagine buying a few NFTs at the time of mint for $200-$500 apiece and “hodling” for a few months to watch them increase in value. That was me with my Rug Radio Genesis NFTs, WomenRise, and a few others I am still working to recover.
One Saturday morning as I transferred ETH to my wallet preparing to mint a project I was excited about, I realized as I connected my wallet, my funds were immediately wiped away and my NFTs were leaving my wallet.
I watched helplessly as a hacker transferred and sold my NFTs in minutes. This comes as I work to save whatever NFTs I had left into another cold wallet while I figure out what happened.
I contacted Opensea to flag my account and mark the NFTs in my wallet as suspicious. I immediately took to Twitter to flag the accounts that had my NFTs and the eth addresses, but as I scrolled through Twitter and saw the responses I received, I noticed a trend… I was not alone.
The rapidly-evolving NFT space has become riddled with global scams with very little regulation over the past few months, yet I am still in the space — buying and trading NFTs daily. If you want to be in this space, here are a few tips to avoid scams.
Do Your Own Research (DYOR)
Sounds simple enough, right? Not so much. Be sure to research the project you’re interested in buying, research team members, and check their background and what projects they have been a part of. I suggest following them on Twitter and checking their engagement on their posts. Lack of engagement with thousands of followers usually screams red flags, yet the projects tend to sell out due to hype usually paid for by influencers and project heads looking to make a quick buck. AMA or “Ask me anything” that project leaders have leading up to their mint date and even after to keep their holders in the know is a healthy sign that the project is a good investment, but continue to do your research. I’d consider joining Discord groups with NFT experts that offer helpful information about the NFT space.
Secure Your Wallet
When you are ready to purchase your NFT, you must have a “wallet.” Metamask is one of the Web 3.0 wallets you can use, but there are several others on which you can store your cryptocurrency. You must store your seedphrase somewhere safe because if anyone has it, they control your funds. It’s also essential that you know how to access your seedphrase, because there is no recovery if you don’t know it, ask Farokh.
There are several ways to fund your wallet, but it is up to you to decide which method works for you. I fund my wallet once a week to make sure I have enough cryptocurrency to make transactions easily. For most companies, there is a “holding” period for your funds to clear, and although you might have $1000 ETH in your wallet, there is a chance it will not be available instantly. I highly recommend a hard wallet like Ledger to Trezor to securely store all of your cryptocurrency. Think of it as a personal bank vault, locking away your private keys, which only you can access.
What happens if your wallet or NFTs are compromised/stolen?
Back to my stolen NFTs. What happened? Like so many in this space, I clicked on a phishing link that left my wallet vulnerable to theft.
Once I contacted Opensea about my NFTs being stolen, I filled out a report online with IC3. This report ensures that my NFTs remain flagged on their platform, which is crucial because they cannot sell them.
However, Looksrare is a different story. Your stolen NFTs can still be sold on their marketplace, but there is comfort in knowing they can sell them on that platform.
Why does this matter? No one wants to have stolen NFTs in their wallet because, as the old saying goes, one bad apple spoils the barrel. The buyer’s wallet is now hot, and someone who will want to interact with it is rare. Since reporting my wallet compromised, I have had buyers of my stolen NFTs who were unaware they were stolen reach out to sell them back to me and even had some within the NFT community have sent me ETH to replace them. I have since set up a new Metamask wallet and have slowly repurchased my old NFTs.
I recommend saving up money to buy the ones you want back on Looksrare (they tend to be floor price for a quick flip) before notifying Opensea to unlock your account because it does come with the risk of whoever compromised your wallet still has access.
As more people get into this space, the more scammers will see an opportunity for profit, but there are ways to stay safe.
1. NEVER click any link from anyone you don’t know, especially in Discord groups where scammers are notorious for hacking.
2. Be aware of airdrops. Due to NFTs existing on the blockchain, your wallet address is public to everyone, and so is your every move. Meaning anyone can interact with your account, and they can send NFTs to your wallet without asking. Do not engage unless you know who the airdrop is coming from.
3. Double-check all minting links. Scammers will send fake OpenSea offers to people’s emails, asking recipients to click the “view” button. Those links often will take you to a fake page asking for your wallet and seed phrase. (Never send someone your seed phrase.) Similar scams are rife on Discord, as stated in #1. Once a scammer has your info, they’ll transfer all of your assets to another wallet and sell them — and there’s no way of stopping them. You’ll find yourself in a race to salvage as many NFTs as possible.
4. Get in the habit of transferring your NFTs to a new cold wallet every few months to keep your assets safe. I know it sounds tedious, but better safe to pay to transfer NFTs safely than pay to replace NFTs stolen from you.
Although I am one of the thousands of people that have fallen victim to their wallets being compromised, I still enjoy the NFT space, most of the people in this space, and I look forward to growing in it. This community is still very early in its inception, so we are all just learning as we go, which makes this an exciting time to be alive, right?
