Over $100m worth of non-fungible tokens (NFTs) have been reported as stolen in the past year as scammers pounced on a surge in interest in digital assets, new data has revealed.
The amount of NFTs publicly reported as stolen through scams between July 2021 and July 2022 topped $100m and netted perpetrators around $300,000 per scam on average, according to a new report from blockchain and analytics firm Elliptic.
Analysts at Elliptic said that thieves had continued to swoop despite a downturn in the market this year, with over 4,600 NFTs reported as stolen in July 2022 – the highest month on record.
NFTs – digital assets which record proof of ownership on the blockchain – have been the subject of a trading frenzy in 2022 as traders piled onto platforms like OpenSea to buy and sell the tokens.
Sales of NFTs passed $40bn last year and have hit more than $42bn already in 2022, according to Chainalysis last month. The boom has presented an opportunity to scammers however, who have used the frenzy to scoop up digital assets.
“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,” analysts at Elliptic said.
“NFT marketplaces must be proactive in risk management to mitigate these repetitional risks and issues. Sanctions screening solutions are also becoming increasingly essential for NFT-based platforms.”
Elliptic said that money laundering – which has long plagued the crypto industry – had hit around $8m on NFT-based platforms in the past 12 months.
But almost $329m worth of funds in the NFT market came from services such as so-called cryptocurrency mixers, which are designed to hide the funds’ origin, Elliptic said.