Brooklyn DA shuts down 40 NFT scam sites after artist loses $135K

The Brooklyn District Attorney’s office has dismantled 40 fraudulent NFT marketplace websites following a scam that led an 85-year-old artist to lose $135,000.

The scam began when the artist was contacted on LinkedIn by someone posing as an art dealer.

The scammer convinced the artist to mint his artwork on a fake NFT marketplace that resembled OpenSea.

The artist was later told that he had made $300,000 in profits but needed to send a $135,000 "fee" to access the funds.

The victim liquidated his retirement account, took out loans, and used credit cards to send the money.

Upon realising the promised funds would never arrive, the artist was left "emotionally and financially devastated," according to the Brooklyn District Attorney’s Office.

District Attorney Eric Gonzalez explained that the tactics used in this scam led investigators to uncover a network of fraudulent NFT websites specifically targeting artists.

“It is my hope that by shutting these domains and raising awareness about this scheme, we will prevent others from falling victim to this scam,” Gonzalez stated.

The investigation revealed that two other artists from Georgia and California had fallen for the same scam.

The Virtual Currency Unit of the District Attorney’s office traced the funds to an exchange in Nigeria, where the funds were cashed out for Nigerian currency, making recovery impossible.

The fake OpenSea site was also traced back to Nigeria, where it appeared to be controlled and paid for from the country.

Some of the now-shuttered websites had prompts asking visitors to input their crypto wallet seed phrase, allowing scammers to steal users’ assets.

The Brooklyn District Attorney’s office warned artists to only use established NFT marketplaces and to remain cautious of phishing scams.

“It also advised artists never to share their crypto wallet seed phrase and emphasised, ‘If it seems too good to be true, it likely is.’”