Over $100 million in NFTs were reportedly stolen by thieves in the year before to July, according to blockchain research firm Elliptic, as the quickly evolving digital asset opened a new front in the hacking problem confronting cryptocurrencies.
Images, videos, and text are all examples of digital content on the blockchain called NFTs.
Wealthier cryptocurrency investors invested billions of dollars into the assets in 2021 to profit from their increasing values, which led to a boom in the market. However, NFT prices and sales volumes have dropped due to the decline in cryptocurrency values in May and June this year.
Despite its decline, the NFT industry is still plagued by scams, with July having the highest number of NFTs reported stolen ever.
In 2022, 23% of NFT thefts were caused by security breaches on social media, according to the report.
According to Elliptic, scams netted thieves $300,000 on average. Given that not all crimes are made official,
the actual number of NFT thefts is probably significantly higher.
The cryptocurrency business has long been plagued by hacks and frauds, and regulators around the world are growing more worried about the use of crypto assets in cybercrime.
The amount of money laundering on NFT-based systems, according to Elliptic, is just $8 million. But about $329 million of the funds in the NFT market came via businesses like so-called cryptocurrency mixers, which are meant to conceal the source of the funds, according to Elliptic.
Before it was banned by the US this month, Elliptic said that one such mixer, called Tornado Cash, was responsible for laundering just over half of the NFT schemes’ revenues.
Elliptic warned that “state-sponsored exploits and sanctioned groups pose a significant threat to NFT-based businesses,” noting a $540 million heist in April that U.S. officials have attributed to North Korea’s Lazarus Group.