$100 million worth of NFTs stolen in the past year; BAYC most targeted
Alongside the growth of the NFT area, inter-related crimes have also increased. A recent report by Elliptic revealed that more than $8 million of illegal funds had been laundered via NFT-based platforms since 2017.
According to the report, another $328.6 million comes from obfuscation services like crypto
mixers, which may reflect income from illegal activity. Crypto mixers have been the talk of crypto town ever since sanctions were imposed on Tornado Cash.
Mixer, as such, was involved in a few recent hacks in the DeFi world. According to the US Treasury Department, Tornado has “repeatedly failed” to impose controls to prevent the platform from being used to launder funds by malicious cyber actors. According to Elliptic,
“Tornado Cash, a US-sanctioned mixer, was the source of $137.6 million of cryptoassets processed by NFT marketplaces and the laundering tool of choice for 52% of NFT fraud proceeds before being sanctioned by OFAC in August 2022.”
Get into the nitty gritty
From July ’21 to July ’22, over $100 million worth of NFTs were publicly reported as stolen via fraud. In retrospect, the perpetrators collected around $300,000 per fraud on average. Being in a bear market hasn’t kept exploiters away. Elliptical revealed,
“July 2022 saw over 4,600 NFTs stolen – the highest month ever – indicating that fraud has not abated despite the crypto bear market.”
In terms of value, however, May tops the list. A confirmed $24 million worth of NFTs were stolen during the month. However, the actual numbers are likely to be higher, as thefts are not always publicly reported.
Bored Ape Yacht Club NFTs were the most valuable series stolen. In particular, 167 pieces worth more than $43.6 million and more than $8 million were laundered via the NFT platform.
The BAYC boat has not been running very smoothly lately. The floor price had fallen to 66 Ethereum earlier this week and it was targeted by fraudsters linked to a phishing website.
Read more – NFTs: Bored Ape Yacht Club floor drops to 66 ETH
The NFT trading arena is being expanded
Despite the increase in NFT-related crime, one cannot turn a blind eye to the burgeoning interest of participants. NFT trading increased from the summer of 2021, with daily average sales exceeding $50 million and over $17.7 billion in NFTs sold that year. The same accounts for an increase of over 200% from 2020.
Despite high fees and congestion, NFT trading remains primarily on the Ethereum blockchain. Elliptic elaborated on the same, highlighting,
“Meanwhile, alternative blockchains like Solana and Polygon remain behind, despite aggressive marketing campaigns and creative means to lure people away from Ethereum.”
Furthermore, as illustrated below, the funds flowing into Ethereum-based NFT platforms have increased. Q1 2022 recorded the highest ETH inflow, at $17.4 billion. Unlike stolen funds, ETH inflows bore the brunt of the crypto winter, and as illustrated below, saw a drop to $9.2 billion in Q2.
