NFT Expert: Fraud Prevention Should Be On Brand Not On Market
An NFT security executive recommended that brands that issue NFTs should bear the most responsibility for protecting themselves and prospective investors against fraud.
According to an industry expert, nonfungible token (NFT) exchanges should commit to combating fraudulent NFTs, but brands are much more accountable for safeguarding NFT investors.
In an Oct. 12 interview with Cointelegraph, Yoav Keren, CEO of BrandShield, said that brands issuing NFTs should take the first step in safeguarding themselves and prospective investors against fraud.
According to Keren, it is easier for a brand to identify NFTs that were not distributed by the firm than it is for marketplaces such as OpenSea or Rarible to do so. The CEO said that NFT markets often have less insights into which brands are launching NFTs and other data.
Although markets should not be oblivious to the realities of NFT fraud, companies must nonetheless keep their audiences informed in a public and open manner about any NFT offers. Keren implied by stating:
“Brands should understand the legal implications of misuse of their image, and should take action to protect their customers across all platforms, websites and marketplaces.”
The CEO continued by stating that counterfeiting and copyright violations have emerged as the two most prevalent types of NFT fraud to far.
Despite the presence and sale of an original NFT drop by its creator or authorised party, counterfeit NFT fraud involves the illicit selling of duplicates. Copyright and trademark infringements include unauthorised use of a brand’s identity or image to manufacture and sell non-fungible tokens.
Keren reported that both forms of NFT fraud occur on some of the top NFT markets, such as OpenSea, Rarible, and Nifty Gateway.
“We conducted a scan on OpenSea and found 41,500 suspicious NFT listings using unauthorised likenesses or images associated with prominent celebrities who’ve promoted NFTs or cryptocurrency,” Keren stated. In many instances, fraudsters defrauded customers by committing copyright or trademark violations, he noted.
When a user discovers a dubious listing on a platform, platforms should encourage more reports of phoney listings. This is one method for eliminating NFT fraud. “Ideally, brands and marketplaces should work together on solutions,” Keren stated, adding that attacking a problem from multiple angles is the fastest way to an effective solution.
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Despite urging brands and marketplaces to do their best to safeguard NFT investors, the CEO of BrandShield underlined that customers must do their own research before to investing in NFTs. In addition to double-checking the domain of the NFT marketplace’s website, it is essential to only purchase from certified NFT merchants and avoid suspicious shortened links.
“Work to verify an NFT before purchasing because by the time marketplaces catch on to these abuses, it’s oftentimes too late,” Keren added.
The proliferation of NFTs and the metaverse has provided fraudsters with yet another opportunity to deceive investors into falling for schemes and counterfeits. According to statistics from crypto risk management company Elliptic, investors in NFTs fell prey to frauds and thefts totaling more than $100 million between July 2021 and July 2022.
