NFT trader scammed out of £1.5 million

The concept of NFTs (non-fungible tokens) is so absurd that many people believe the whole thing is simply a scam. People spend money – often tens of thousands of pounds – to own a digital file, such as a photo or video.

But crucially, that doesn’t restrict the public sharing of said file, and in many cases the original creator retains copyright ownership, allowing them to continue to produce and sell copies of their work.

Whether you think the exercise is a waste of money (or perhaps even an ecological isue) or harmless fun, one thing is for sure: NFTs demonstrate the vulnerability of owning digital assets.

This is something an NFT trader learned last month after being scammed out of 16 NFTs that were sold for $2.2 million (about £1.5 million).

Todd Kramer, a New York-based art curator, said he was targeted by a cyber criminal who sent him an email disguised as a contract.

The message appeared to come from a genuine source, but after Kramer provided his credentials, he learned that he’d given an authorised person access to his wallet and digital assets.

Kramer’s collection included images from the highly coveted ‘Bored Ape Yacht Club’. The cartoon ape images are the single most valuable franchise of crypto collectibles.

“I been hacked,” Kramer wrote on Twitter. “All my apes gone. This just sold please help me.”

The tweet went viral almost immediately, and although many users were mocking (as you’d expect from Twitter), the volume of traffic caught the attention of the Bored Ape community, which helped Kramer retrieve some of his files.

As it was, Kramer essentially had JPEGs on his hard drive worth $2.2 million, and if those files were compromised – whether through criminal hacking or physical damage – it would threaten his ownership.

This is what differentiates crypto trading and NFTs from banks or other facilities where you hold assets. Whereas those facilities are required to take steps to protect your assets – and will typically have proof of unauthorised access – the crypto culture emphasises personal responsibility.

There is little recourse when a crypto wallet is compromised – and in this case, Kramer was fortunate to get some of his assets back.