So, in light of recent news on all types of NFT scams and rug pulls, itâ€™s time to take action. A little while ago, $1.7 MILLION dollars in NFTs got stolen in a phishing scam. The hashtag #rugpulls is absolutely overflowing with Tweets of people being scammed. Itâ€™s very chaotic.
And, the thing is, thereâ€™s nothing you can do about it! There are no laws currently governing these types of situations. Therefore, if you fall victim to an NFT scam, thereâ€™s not much you can do about it other than cry. If weâ€™ve learned anything from the StockX Vault thing, itâ€™s that there are no legal actions yet. Therefore, the only thing you can really do is look for the 10 RED FLAGS to avoid.
So, keep reading to find out more! Also, if you want to learn more about everything related to NFTs, click on the button below. It is a hub of FREE NFT guides on all things about the virtual world and being a part of it! See it for yourself!
THE 10 NFT SCAMS & RUG PULLSÂ
To preface, during our research and experience with NFT scams and rug pulls, weâ€™ve come to one conclusion: itâ€™s good to be a sneakerhead. Although there is probably a lot more money-making potential in NFTs vs sneaker reselling; the risks are much lower! MUCH LOWER!
1. You buy and sell sneakers on legit, guaranteed marketplaces
2. If anything goes wrong, you can ask for a refund
3. A lot of sneaker websites offer legit checks!
4. The amount of money on the line is MUCH less
5. An entire sneaker marketplace can not disappear overnight.
#1 UNDOXXED TEAM
First, weâ€™ve got a major red flag related to NFT scams and rug pulls – UNDOXXED TEAMS. Doxxing means intentionally releasing personal information about someone online. In other words, having full transparency. This usually means avoiding anonymous artists or teams. If you canâ€™t find at least a single person on social media platforms, itâ€™s pretty SUS!
Doxxed teams create a much more trustworthy environment and add accountability. If everyone knows who you are, youâ€™re not gonna scam them. So, it is very important to have at least one or two people doxxed on the NFT team project! Doxxed teams mean there are actual owners which also means they probably wonâ€™t vanish into thin air!
#2 FAKE ACCOUNTS
Next, weâ€™ve got NFT scams in the form of FAKE ACCOUNTS. These types of rug pulls use a little bit of a more cunning tactic. If you donâ€™t already know this by now, these days itâ€™s pretty easy to buy older established Twitter accounts. You can literally buy anything online, a Twitter account is way too easy! Check the following red flags for a fake account:
– The NFT Twitter account is older than the NFT hype (most probably not before 2021)
– An overly huge Twitter following (check Twitter Audit for a legit check)
– Check engagement
#3 FAKE FOLLOWERS
Also, just as easy as you could acquire a fake account, itâ€™s even easier to get FAKE FOLLOWERS. A lot of people fall victim to NFT scams because of how â€śbigâ€ť a Twitter account seems. A huge account with a huge following HAS to mean it’s legit. Right?
There are tons of websites that offer fake accounts that people can buy. Also, there are certain types of bots that mass creates Discord accounts within MINUTES. These Discord accounts can import hundreds of THOUSANDS of users that engage in conversation. It all looks real and legit! So, if youâ€™re gonna look at the following, do some extra research. Check the teams.
#4 FAKE HYPE
And then, thereâ€™s the FAKE HYPE. These NFT scams are probably easier to figure out and all comes down to your gut instincts. If thereâ€™s a celebrity endorsing a certain NFT out of the blue, itâ€™s pretty sus. Especially if that certain celebrity has NEVER even talked about NFTs before. Also, this applies to all kinds of paid cameo gigs and stuff like that. This isnâ€™t a complete dealbreaker. But, if it feels sus to you and a lot of people, it probably is!
Also, when the team OVER hypes the roadmap to their project with a lot of unrealistic promises, itâ€™s super sus! Use your knowledge of NFTs to help you with this. If something feels too good to be true, itâ€™s the typical making of rug pulls. Things like:
– Promises with short timelines
– Promises of cash
– Taking only a few days to mint a huge project
– An entire project with a very small team (less than 3 people)
#5 MINT PRICES
But, what about NFT scams and rug pulls related to MINT PRICES? A lot of things play a role in the minting prices of NFTs, including hype and FOMO. The FOMO is real, fam!Â
However, you have to know when things are unrealistic! Just because they are demanding such prices, doesnâ€™t mean this is the norm! If someone is trying to build an NFT community (not a scam), they would start with something more affordable!
#6 AGGRESSIVE VIBES
And, another thing you should look out for is the passive AGGRESSIVE VIBES in the NFT community. Yes, itâ€™s a thing. Predatory tactics and other approaches are major giveaways for NFT scams or other types of rug pulls. If someone is building a community and trying to grow their customer base, they canâ€™t act predatory.
This includes banning people for listing below prices or announcing floor sweeps. Banning people for expressing concerns or FUDs. All in all not create an environment where people can communicate with one another.Â
#7 META CLICHE
Another thing you have to consider is META CLICHE. You can only figure out these types of NFT scams with more experience. The more you know about the industry, the culture, the NFTs, and all; the more youâ€™ll spot these. Repetitive meta or roadmaps that look a lot like other projects are a big indicator.
Teams that donâ€™t address legal concerns, security, token insurance, or guarantees are also a concern! Or, the final indicator for meta cliche would have to be sustainability. If they donâ€™t have long-term plans for longevity and possibly P2E sustainability, thatâ€™s a NO.Â
#8 SHORT WHITELISTING WINDOW
Further down the list, weâ€™ve got SHORT WHITELISTING WINDOWS. These are obvious giveaways for grade-A NFT scams and classic rug pulls. Whitelists are supposed to offer you benefits from the inside of the already existing tight-knit community. If the NFT project is conducting a short whitelisting window, itâ€™s a bit suspicious. After all, whitelisting is based on real-life human interaction and engagement
#9 LIMITED ART
Next, weâ€™ve got the LIMITED ART COLLECTION thing. The artist or project you should go for has to have an established portfolio that you can review. If they donâ€™t have a wide array of art, characters, collections, or more; NOT IT. Consistency is KEY.
#10 PLAGIARIZED ART
Speaking of consistency, what about PLAGIARIZED ART? Plagiarism is a huge factor in NFT scams.
If they lack creativity and innovation, it beats the purpose of an NFT and what it means. So, if the NFT looks excessively familiar, maybe you should think twice.
SHADY STORAGE SITES
Finally, the last one of our NFT red flags: SHADY STORAGE SITES. This is where NFTs can go missing, you lose them, or MAYBE even get stolen? It goes without saying, where your NFT goes is absolutely crucial. When you buy an NFT, you get a record of ownership AKA a smart contract.
The smart contract then gets minted on the blockchain. BUT, the actual NFT could be stored somewhere else. This is usually on the decentralized platforms that store your NFT. Just make sure it is a trustworthy one that wonâ€™t eventually screw you over.
The bottom line is: the world of NFTs can be scary. But, if you have the right knowledge, the right tools, and the right marketplaces; youâ€™ll be okay. OR, if you wanna be even safer, stick with sneaker copping!