FOR IMMEDIATE RELEASE
Friday, December 6, 2024
Brooklyn District Attorney Shuts Down 40 Domains Associated With NFT
Crypto Scam Targeting Artists, After Brooklyn Painter Lost Over $135,000
Victim Was Contacted with Offer to Sell His Artwork in NFT Marketplace Through Website That Turned Out to be Bogus; Lost Life Savings Trying to Access Purported Bitcoin Earnings
Brooklyn District Attorney Eric Gonzalez today announced that his Virtual Currency Unit successfully disrupted a cryptocurrency scam that was targeting artists throughout the country. An 85-year-old Brooklyn resident was scammed out of his life savings, sparking an investigation that traced the money he paid back to Nigeria and identified 40 scam NFT art marketplace sites that appeared like legitimate marketplaces. Those domains have now been seized, preventing future victimizations.
District Attorney Gonzalez said, “Cryptocurrency scams can take many forms but have similar characteristics, such as preying on vulnerable victims and requesting fees to redeem purported earnings. These were the tactics used in this case, leading our investigators to a network of fraudulent websites that specifically scammed 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.”
The District Attorney said that in May his office received a report by the children of an 85-year-old professional painter from Clinton Hill, Brooklyn, relating that their father was deceived by an online scammer posing as an art dealer. He was contacted via LinkedIn by a purported dealer for “OpenSea/Private Mint,” a company whose website closely resembles that of OpenSea, a legitimate NFT marketplace headquartered in New York City. (NFTs, or non-fungible tokens are digital assets that are stored on the blockchain and can represent content, such as digital artwork, that can be sold or traded.)
The so-called art dealer told the victim that she wanted to convert his art into NFTs and sell them, convincing him to sign a contract on the fake site. She later told him that he had earned over $300,000 in bitcoin and that he needed to first pay a fee to access those proceeds. To get the bitcoin he sent “OpenSea/Private Mint” over $135,000 by liquidating his entire IRA account, making payments from his credit card and securing a loan. He used online services to convert his money into cryptocurrency to pay the fees. The fraud unraveled when he eventually realized that he was not getting the promised $300,000, leaving him emotionally and financially devastated.
The District Attorney’s Virtual Currency Unit traced the cryptocurrency that the victim sent to “OpenSea/Private Mint” and found it had been transferred to different accounts at an exchange and primarily cashed out for Nigerian currency — foreclosing the ability for recovery. The OpenSea/Private Mint website appeared to be controlled and paid for from Nigeria. The investigation identified two other senior artists from Georgia and California who had fallen for the same scheme and a network of scam NFT marketplaces that appeared to be targeting artists. Some of the websites required a user to input their cryptocurrency wallet seed phrase, which would give scammers the ability to completely drain the contents of users’ online wallet.
While unable to recover the stolen money that was outside U.S. jurisdiction, investigators were able to identify over 40 scam NFT art marketplace sites for which they submitted seizure orders. These domains have now been seized and redirected to a KCDA seizure page with a warning message. Many of them appeared to be spoofing legitimate NFT marketplaces.
The District Attorney shared the following warning signs and tips to avoid this type of NFT art cryptocurrency scam:
-
- An artist may receive a direct message via an online account from someone purporting to be an art dealer or a representative of a legitimate NFT marketplace. It is important to verify the authenticity of any online art and NFT dealers before engaging.
- Only use established and trusted NFT marketplaces to sell your work. Be alert for phishing attempts via email or phishing websites that appear to resemble well known NFT marketplaces. Phishing websites are often designed to steal credentials and fraudulently gain access to cryptocurrency assets. Legitimate NFT marketplaces do not ask for exorbitant fees upfront to sell NFTs.
- Protect your cryptocurrency wallet. No legitimate NFT marketplace will ask you to supply your seed phrase. Inputting your seed phrase on a website can lead to a scammer instantaneously draining the contents of your entire wallet.
- If it seems too good to be true, it likely is. Do your own research and seek opinions from fellow artists.
The case was investigated by Assistant District Attorney Alona Katz, Chief of the District Attorney’s Virtual Currency Unit with the assistance of Virtual Currency Analyst Sam Weaver, Assistant District Attorney Brian Umana, of the Virtual Currency Unit, and Paralegal Claire Fagan. Detective Investigators from the KCDA Detective Bureau also assisted in the investigation.
#