Brooklyn prosecutors seize 40 fake NFT sites after elderly artist loses $135,000. Scammers lure artists with fake NFT offers and charge fake fees.
Brooklyn District Attorney Eric Gonzalez reported that he has shut down 40 fraudulent NFT marketplace domains as part of a crackdown on scams targeting artists across the country.
The operation began after an 85-year-old Brooklyn painter lost $135,000 to scammers posing as art dealers.
The victim was contacted on LinkedIn by someone claiming to be a representative of OpenSea/Private Mint, a fake platform that mimics the legitimate NFT marketplace OpenSea.
The scammers minted his artwork as NFTs and convinced him to pay a fee to access more than $300,000 in counterfeit Bitcoin proceeds.
The artist liquidated his IRA, maxed out his credit cards, and took out loans to pay the scammers, believing he would make a huge profit.
“These are the tactics used in this case that led investigators to a network of fraudulent websites that specifically defrauded artists,” said Prosecutor Gonzalez. “We hope that by shutting down these domains and raising awareness about this scheme, we can prevent others from falling victim to this scam.”
NFT fraud is back
While the seizure of 40 domains is an important victory, it is far from a permanent solution.
Fraudsters can quickly replicate this scheme by using the same template, slightly changing the domain name, and restarting the operation.
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There are many other cases in which artists have fallen prey to similar scams that exploit social media platforms such as Instagram and Twitter.
They often offer artists exorbitant payments in cryptocurrency to create NFTs, but end up charging fraudulent “minting fees” through fake platforms .
The crackdown comes as NFTs are experiencing a resurgence in popularity and prices of cryptocurrencies have soared to record highs.
Kyle Baird is DL News' weekend editor. Any tips? Email kbaird@dlnews.com.
