Elliptic, a blockchain research firm, reported that thieves stole more than $100 million in non-fungible tokens (NFTs) in the year to July. The blockchain-based assets, which can be transferred by the owner, are digital files that range from computer game avatars to million-dollar cartoon apes.
The NFT sector is riddled with scams, from wash trading to counterfeit works, as the fast-emerging digital asset became a new front in crypto’s hacking problem. It comes after NFT prices and sales volumes plummeted following the collapse of cryptocurrency prices in May and June of this year.
With the highest number of NFTs reported stolen in July on record, scams continue to plague the NFT market even as it declines. According to London-based Elliptic, security compromises via social media will account for 23% of NFT thefts in 2022. Given that not all crimes are reported publicly, the true scope of NFT thefts is likely to be even greater.
While regulators around the world are becoming increasingly concerned about the use of crypto assets in cybercrime, the crypto industry has long been plagued by hacks and scams. According to the report, nearly $329 million in funds were raised in the NFT market through services such as so-called cryptocurrency mixers. Tornado Cash was used for laundering just over half of the proceeds of NFT scams before it was sanctioned by the US this month because it was designed to conceal the funds’ origin.
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