Theft and fraud are rampant in the “Wild West” of NFTs. Here’s how artists and buyers can protect themselves

When friends of artist Giovanna Sun alerted her in mid-January that there was an Instagram account posing as her profile, her reaction was quick and determined: she immediately alerted her other friends and followers to the fake account, and mobilized them to report it to social networks. media platform. Two days later, the account was deleted.

“When many friends help you report the fake account, Instagram will immediately suspend [it]the New York-based artist, collector and tech entrepreneur, who has successfully sold her NFT designs on OpenSea, told Artnet News.

Impostor accounts are becoming a serious problem for artists, whose work is being stolen, minted as NFT and sold on platforms such as OpenSea, which is the largest NFT marketplace. Then there is a second major risk facing the NFT community, more specifically: fraud.

“I’ve heard so many stories from people about Clubhouse, people collecting NFTs from artists while stealing their entire collections and ETH,” Sun said. Technology has allowed artists and creators to venture into the new frontier of NFTs, but it has also made various types of theft possible. Bad actors can pretend to be nice and supportive – a typical attitude in the NFT community – and then find ways to gain access to an artist or collector’s crypto wallet and steal from there. Intellectual property infringement is another common scenario, where some accounts sell pieces that are essentially copies or modifications of an existing original work.

Despite the Instagram account impersonation, Sun did not have her NFTs stolen, nor did she discover that her work had been minted and sold on other platforms without her permission. And that should be considered luck.

So many of his fellow artists and creators have had their art stolen in this way that there is even a dedicated Twitter account, @NFTtheft, to document and publicize the creators’ ordeals with this, as well as other incidents of plagiarism and fraud. Since its inception last September, it has reported thousands of incidents through more than 3,440 tweets.

As the market continues to grow exponentially – Bloomberg reported in January that the NFT market had reached nearly $41 billion – the problem is only getting worse. There is no centralized data to reflect the severity of this NFT fraud, but in a Tweeter Responding to a change in usage policy, OpenSea revealed that more than 80% of items created with the platform’s free mint tool were “plagiarized works, fake collections and spam”.

“There are a lot of people claiming to be supportive of accessing your wallet and in turn your NFTs,” said Josh Sandhu, co-founder of Quantus Gallery, a London-based new NFT gallery and consultancy service. . “There’s an abundance of phishing scams out there, and there are some really smart people creating malicious contracts on the blockchain that will give them access to your wallet.”

Sandhu recently noted that the gallery has an OpenSea clone and many people have connected their wallets to this account. One of them lost Bored Apes.

Crypto is still “quite the Wild West,” he said. “The law hasn’t quite caught up. Even the LAM [anti-money laundering] the controls that are standard in the art market are not a requirement with NFT art, and this is because NFTs are generally not considered works of art by regulators.

For artists, working with a reputable gallery can help, Sandhu said, as the gallery will be responsible for providing authentication and protecting the artist as well as the buyer. But whether as an artist or a buyer, it is necessary to be extremely careful in the field of crypto. “The nature of allowing malicious sites to access your wallet is also not the standard phishing attack. This is not to avoid a link if you have already connected your wallet. You will need to disconnect access from the malicious smart contract or, better yet, send your assets to a new wallet that has not been compromised,” he advised.

NFT markets are doing what they can to crack down on these issues.

“One of our operating principles is to support creators and their audiences by deterring plagiarism and intellectual property infringement on OpenSea,” a spokesperson for the platform said in a statement to Artnet News. “It is against our policy to sell NFTs using plagiarized or stolen content, which we routinely enforce by removing items from the list and in some cases banning accounts. We are actively expanding our efforts across customer support, trust and safety, and site integrity so we can act faster to protect and empower our community and creators.

Meanwhile, platforms where creators publish and share their digital creations have pledged to improve their games against NFT art theft. DeviantArt, for example, launched a beta version of DeviantArt Protect last July, an automated image recognition software that scans public blockchains and third-party marketplaces for potential infringements of NFT works. By December last year, DeviantArt Protect had scanned over 3.7 million NFT images per week and issued over 50,000 alerts related to potential theft of NFT artwork. The platform plans to expand the service this year.

CXIP, a platform that helps artists mint their NFTs securely while providing support for US copyright registration, is rolling out a feature to automate the copyright application process for United States copyright registrations. “This is a new formality required in the United States for creators to have enforceable force over their work,” Jeff Gluck, CEO and co-founder of CXIP, told Artnet News. “Some international jurisdictions have similar requirements and some form of reciprocity, some don’t.”

Gluck, who is also representing street artist Futura in an alleged art infringement lawsuit against The North Face, said the CXIP mint allows users to create their own personal smart contract, rather than a shared contract and centralized that is commonly found in a market. The personal smart contract, he said, offers “advanced security, on-chain provenance and cross-market royalties”, while the alternative does not offer a similar level of protection and “may result in provenance incorrect”.

Smoke and mirrors #60. Staff Knight hit on CXIP smart contract. Courtesy of Justin Aversano.

Justin Aversano, artist and co-founder of Quantum Art and SaveArtSpace who created NFTs on CXIP, said the platform is “a great example of protecting yourself legally,” but since the crypto field is a wild west which transcends existing jurisdictions, even an advanced platform like CXIP has its limitations.

“Artists can’t claim their copyrights for all jurisdictions unless they have a deep pocket,” said artist Giovanna Sun, adding that even for platforms that have layers of guardians, scammers will not leave easily.

Artists and creators need to go the extra mile to protect themselves against plagiarism, fraud and theft in the NFT world, and a key aspect of that is building a strong online presence, Sun said. Building social media presence isn’t just about self-marketing for NFT creators; it is a self-protection mechanism.

“Brand image is important. Let collectors know that you are the original artist and creator,” she said. But if one is social media shy, make sure he’s glued to different artistic communities, so “other artists can help him express himself.”

Sun wasn’t alone in pointing out that the NFT community itself is one of the best resources for artists looking to protect their work. Aversano accepted. “The community that stands with artists will protect the artist’s work,” he said.

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