The meteoric rise of the crypto market led to a seemingly endless supply of projects with the hope that they could fix something – the economy, a project in progress, your personal life. Furthermore, this increasing demand for ICOs has led to an alarming number of fraudulent projects built to take advantage of novice investors. And these fraudsters take their scams online with various social media scams and poorly constructed whitepapers buried deep on the internet. NFT Trading
The digital world has given various dimensions to spend money, starting from restaurants and bars to online marketplaces and auction houses. If you can think of it, there’s probably an app or website for it. With the rise of cryptocurrency, however, a new way of spending money has emerged: ‘tokenized assets,’ or you can call it NFT. These are assets that are stored on a blockchain and can be traded between users. While this offers a whole new range of possibilities for trading, it also comes with a risk: scams.
NFT scandals seem to be happening more and more frequently. How can the users prevent themselves from falling victim to these scams? And more importantly, what is the right way to invest in NFTs?
In this article, you will explore some solutions to these problems and some tips on how to stay safe while trading in the NFT market.
What are NFT Trading Scandals?
The world of non-fungible tokens (NFTs) is one that is still in its early days. Despite this, the NFT market has already seen its fair share of scandals. Perhaps the most notable of these was the Kin token scandal, which saw the developers of the Kin token accused of fraud and price manipulation.
More recently, there have been allegations of wash trading within the NFT market. Wash trading is a form of market manipulation that occurs when an entity buys and sells its own shares or any other token to different sellers or traders illegally.
A recent scandal in the NFT (non-fungible token) world has rocked the crypto community. A few prominent exchanges have been caught up in allegations of price manipulation and insider trading. Some NFT traders have even claimed that the prices of some tokens were being manipulated for the benefit of a few.
These scandals have rocked the NFT community, have raised questions about authenticity, and are challenging the trustworthiness of this new and emerging world of decentralized token exchange.
Why are NFT scandals on the rise?
One reason for the increase in NFT scandals may be that the market for these digital assets is growing rapidly, and with that growth comes the opportunity for wrongdoing. Additionally, the opaque and unregulated nature of the digital asset market may be contributing to the problem. Fraudsters may feel that they can get away with more scams in this environment.
Another possible factor is the increasing popularity of decentralized exchanges (DEXs). DEXs allow users to trade tokens without relying on a third party. This makes it easier for scammers to execute fraudulent schemes, as there is no central authority to which victims can turn for help. Many casinos encourage their users to jump into crypto sphere. They offer NFTs and other perks for early adopters. However, be sure to only interact with legit casinos such as Gclub.
What was once a niche industry is now becoming a breeding ground for scams and fraudulent activity?
Here are some of the reasons why NFT scandals are on the rise:
- Lack of understanding about NFTs and their potential uses.
- Fraudulent projects that promise guaranteed returns or unrealistic profits.
- Misuse of funds by project creators.
Let’s have a look at one of the biggest and most recent incidents of the NFT scandal that shook the Crypto world.
NFT Platform “OpenSea” Insider Trading Scandal
The NFT marketplace ‘OpenSea’ has been rocked by a scandal of insider trading that involves a senior team member. Due to this, the trading volume of non-fungible tokens declined from recent record highs in the present day.
Recently, the company ‘OpenSea‘ acknowledged that it learned a few days back that an employee purchased items being shared on the marketplace’s front page before it was publicly available. In its statement after the incident took place and came into the public domain, OpenSea said that it had now updated its company’s guidelines properly so that team members may not be able to purchase or sell NFTs before they are featured on the site.
OpenSea’s head of product, Nate Chastain, claimed to shop from page listings before they dropped. Storing them in a secret wallet before selling them back after the initial launch typically boosts their prices.
The industry is still under discussion as to how lawmakers might regulate it best. Since NFTs are not considered securities or commodities in the United States, insider trading on such tokens may not be considered illegal. OpenSea, however, is taking the allegations seriously, saying that Chastain’s behavior does not abide by company guidelines and will not be at all tolerated.
It’s clearly a fraud that has successfully erased the trust of people on the platforms that they used to have trust on. The incident can be said to be an insider trading fraud. But as NFTs are decentralized tokens, no central law applies to them, and hence no strict legal actions could be taken.
The company being responsible for a renowned position in the NFT trading world, took its responsibility and took disciplinary action on the employees that were involved in this incident of insider trading. Although the situation got under control very soon, it has triggered an alarm within the customers who are already doing or even those who are planning to jump into NFT trading.
How to prevent yourself from falling victim to these scams?
There are a few key things to remember in order to protect yourself from scummy NFTs. First, always do your research before investing in any new project. Look into the team behind the project, read reviews, and check for any red flags.
Second, be careful about where you store your tokens. Keep your tokens in a safe and secure wallet, and never give your private key to anyone. Finally, always be vigilant about fake or phishing websites. Make sure you are visiting the correct website, and never enter your personal information into a website that you don’t trust.
Wrapping Up
Non-fungible tokens are digital assets that are unique and cannot be interchangeable. They are often used in collectible games, such as CryptoKitties, and represent a new frontier in the world of digital asset ownership. This is a new and growing industry and one that is often used for trading digital collectibles. These tokens are unique, and each one has its own value.
Recently, it was discovered that a popular NFT trading platform had been cheating its users. This has led to a lot of mistrust and suspicion in the NFT community. Many people are now reluctant to trade or invest in NFTs, fearing that they may be cheated or taken advantage of. This could have a negative impact on the overall development of the NFT ecosystem.
