Can NFTs be stolen and who is harmed?

If you spend any time in the crypto space these days, you know that these types of digital assets can be targets for fraudsters. And yes, NFTs can be stolen.

Non-fungible tokens, or NFTs, are unique cryptographic tokens that represent ownership of digital collectibles like art, music, or even videos. They have become popular over the years, with some selling for millions of dollars.

If you spend any time in the crypto space now, you know that this type of digital asset can be a target for fraudsters. And yes, NFTs can be stolen.

Think of an NFT as a key to a vault. Once they get in, they can take whatever’s in that vault and send it to another wallet or sell it online. Once that happens, getting your digital assets back is difficult, and keeping them safe can be tricky.

Security risks on NFT platforms

Stealing NFTs is not the same as regular theft, which involves traditional theft or robbery on the street. It’s all digital, which means thieves can target your asset anywhere, anytime, making it hard to track down who the culprit is. Some security risks you should be aware of include:

1. Hack Exchange

NFT marketplaces are like online stores where you can buy and sell digital assets. Some online marketplaces like OpenSea, Rarible, and others are prime targets for hackers because of their high-value NFTs. If hackers break into an exchange, they can get into a user’s wallet and steal the valuable NFTs.

2. Phishing attacks

Scammers create fake emails and websites that look like legitimate projects in the NFT space. You may give out sensitive information like your login credentials and password, which allows hackers to access your NFTs.

3. Wallet vulnerabilities

The software wallet you use to store your NFTs has a few things that need fixing. And if your digital wallet’s security isn’t strong, hackers can exploit your digital assets.

Is stealing an NFT theft?

It’s unclear whether “stealing” NFTs is against the law. Copying the digital art attached to an NFT violates copyright laws, but simply “right-clicking and saving” a copy of an NFT is not the same as stealing.

The main distinction of an NFT is that it is a certificate of digital ownership, not the artwork itself. Owning an NFT grants you certain rights, such as selling it, but it does not automatically give you copyright to the artwork.

So when making unauthorized art breaks copyright lawsCopying an NFT is more of a legal gray area. The original owner still has the ownership rights, even if people make copies of the art.

Major NFT heists that made headlines

Some major NFT thefts have made headlines in recent years. Here are a few notable examples:

In early 2022, hackers stole around $18.7 million worth of tokens from Lympo, a sports NFT platform. They broke into 10 different wallets connected to the platform.

Later that year, the Bored Ape Yacht Club’s Instagram account was hacked. Thieves made off with several valuable NFTs, including Bored Apes and others, worth around $14 million in total.

In 2021, a game called Farmers World lost an estimated $15.7 million in a hack. Some reports say it may have been even more.

Public domain image courtesy of maxpixel.freegreatpicture.com. CC0

DragonSB Finance, an NFT gaming project, lost $10 million when hackers hacked its smart contract in 2022.

OpenSea, a popular NFT marketplace, was hit by a phishing attack in 2022. Hackers stole NFTs worth around $3.4 million but later returned some that had not yet been sold.

7 steps to protect your NFTs

Protect your valuable NFTs from theft and scams by making wise choices and staying alert.

1. Choose a secure wallet: Choosing a reliable wallet to store your NFTs is extremely important. Hardware wallets like Ledger and Trezor provide the highest level of security by keeping your private keys offline. Software wallets like MetaMask are easier to use but require more care to remain secure online.
2. Avoid phishing scams: Avoid clicking on strange ads or links. If you are going to buy or sell NFTs, make sure the website is legitimate and established.
3. Use a reliable NFT websites: Don’t use unknown websites. Buy and sell NFTs on well-known marketplaces like OpenSea, Rarible or SuperRare.
4. Never share your seed phrase: Your wallet seed phrase is the secret password for your NFTs. Don’t tell anyone.
5. Audit your portfolio: Review your wallet activity regularly to ensure it is legitimate. Be wary of unsolicited NFTs as they could be part of a scam attack.
6. Enable 2FA: For extra protection against theft or any malicious attacks, enable your two-factor authentication.
7. Keep your software up to date: Always use the most up-to-date version of your wallet software for the best security.

Ongoing efforts to establish transparent legal guidelines on NFTs

As the NFT market continues to expand, stakeholders are trying to increase its transparency and security. Here’s a breakdown of the details;

A crucial aspect involves determining the status of NFTs and distinguishing between owning an NFT and owning the actual artwork. Lawmakers and experts are collaborating to modify copyright and intellectual property laws in response to the challenges posed by NFTs.

Governments are starting to make rules about NFTs. For example, the European Union has included NFTs in some anti-money laundering risks through its Fifth Anti-Money Laundering Directive (5AMLD). However, more comprehensive regulation is still needed to address issues such as contract rights, estate planning and cross-border enforcement.

NFT spaces are also taking proactive steps to protect NFTs. Many have implemented Know Your Customer (KYC) procedures and collaborated with law enforcement to track NFT sales and detect suspicious activity. They also educate users on how to protect their digital assets.

In short

NFTs are valuable digital assets that can be stolen through various cyberattacks and can cause harm to people. Owners lose money and buyers can lose their purchases. These thefts also make people less trusting of NFTs. By copying NFT art may violate copyright lawsthe legal status of “stealing” NFTs remains unclear.

To keep your NFTs safe, follow the steps mentioned above and stay vigilant. As NFTs become more popular, people are working to make better laws and security rules. Stay updated and be careful to keep your NFTs safe in this ever-changing online world.

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