Key Takeaways
- The Virtual Currency Unit of the Brooklyn District Attorney’s Office has seized and shut down 40 fraudulent websites that were posing as NFT art marketplaces after an 85-year-old man was scammed for $134,000.
- Clinton Hill, an artist, was contacted on LinkedIn by a person who identified himself as an art dealer for a fake NFT marketplace resembling OpenSea. He was then convinced by the man to mint his artwork as an NFT on the platform.
- Hill was told that his piece made $300,000 in profits but to access the fund, he had to pay a $134,000 minting fee. He transferred the amount after taking out a loan, maxing out his credit cards, and liquidating his retirement savings.
- It was later discovered that the whole operation was a scam and DA Eric Gonzalez’s team was unsuccessful in recovering the stolen funds which were transferred to accounts in Nigeria, where it was converted into the local currency.
The Brooklyn District Attorney Eric Gonzalez’s office announced on Friday that it has shut down 40 fraudulent websites posing as non-fungible token (NFT) marketplaces after an artist was conned out of his life savings by a scammer.
Brooklyn DA’s Office Shuts Down 40 Faux-NFT Sites After Scammer Stole $134,000 From An Artist
The victim, 85-year-old Clinton Hill, was contacted on LinkedIn by someone posing as an art dealer for a fake digital art marketplace called “OpenSea/Private Mint”, which resembled the prominent NFT platform OpenSea. The faux-art dealer convinced Hill to sell his artwork on the site as an NFT.
The scammer later told the artist that he had made $300,000 worth of profit in Bitcoin (BTC) from his NFT sales, but to access those proceeds, he had to pay a $135,000 “minting fee”. He sourced the amount by liquidating his retirement account, maxing out his credit cards, and taking out a loan.
However, the man soon realized that he wasn’t going to get his hands on the $300,000 promised, leaving him “emotionally and financially devastated”, stated the DA’s office.
DA Gonzalez said that the tactics used by investigators in this case resulted in the team discovering a network of fraudulent websites that were specifically targeting artists. His office found out that two artists, from Georgia and California, also fell victim to the OpenSea/Private Mint scam.
However, despite their efforts, the District Attorney’s Virtual Currency Unit was unable to recover the stolen funds. They traced the funds to several accounts in an exchange in Nigeria, where it was converted into Nigerian naira and cashed out, foreclosing any ability to return it to the victim.
Scammers Are Prompting Victims To Enter Their Wallet Seed Phrases To Steal Funds
The DA’s office assumes that the fake OpenSea-style website was controlled and paid for from Nigeria and that some of the 40 websites that are now shuttered prompted visitors to enter the seed phrases to their crypto wallets, which would give scammers access to completely drain their token balances.
Gonzalez issued a few safety tips for those involved with NFT sales and trades, emphasizing the importance of using established digital asset marketplaces to sell and to be alert at all times for phishing emails and fraudulent websites that resemble popular platforms. He also asked artists to never reveal their crypto wallet seed phrase, warning that only illegitimate marketplaces would ask to provide the details.
While the seizure of 40 websites is a significant victory, it is far from a permanent solution. Scammers can quickly replicate the scheme using identical templates and slightly altering domain names to continue their operations.
They are also exploiting social media platforms like Instagram and X to trick other artists into falling for the same scam. Victims are offered absurdly high payments in cryptocurrency to turn their artwork into NFTs, only for them to be charged fake “minting fees” to access the so-called profits on the fraudulent platforms.
While this case is happening, the NFT market is making a comeback and cryptocurrency prices are surging to record highs amid Donald Trump’s election victory and the market’s expectation that his administration will enact crypto-friendly policies in the U.S.
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