James Atkins
Editor
Editor
Last year, over $100 million worth of non-fungible tokens (NFTs) were lost to scams, according to an Elliptic report. Of the $101 million worth of NFTs tracked by the blockchain analysis firm, nearly all were lost to scams. Here are some key points to note:
According to London-based blockchain analytics firm Elliptic, more than $100 million worth of non-fungible tokens (NFTs) were plundered in the past year.
The figures represent NFT plundering that was publicly reported between July 2021 and July 2022, but the firm suggests the number could be higher.
Elliptic said it identified 4,000 Elliptic-tracked NFTs that were reported as lost or stolen during the period with a value of $101 million. “NFT thefts are increasing in scale and frequency as the market continues to grow,” Elliptic says.
The report comes as the total value of the NFT market has surged in recent months. Sales reached $2.6 billion in the first six months of this year, up from $338 million in 2020, according to nonfungible.com.
The vast majority of NFT thefts were reported by exchanges, Elliptic said. The report found that 78 per cent of the value of all NFTs stolen since 2017 were taken from exchanges.
During this time, cybercriminals were able to steal an average of $300,000 per heist. July 2022 witnessed a new high of 4,600 NFTs stolen. Even though the crypto winter hurt the entire market, NFT scams continue to grow.
The illicit transactions totalling around 52% of all NFT funds stolen from marketplaces were processed using Sanctioned Tornado Cash.
Elliptic’s research also showed that a small number of exchanges dominate the NFT space. With just three – OpenSea, Enjin and wax.io – responsible for over 60 per cent of all NFT trading volume.
This concentration is likely to increase as the market matures, the report said. Noting that “the top three exchanges had a combined market share of just over 20 per cent in January 2020.”
According to the analysis, NFT-based platforms have aided launderers in laundering more than $8 million in illicit money since 2017. These amounts, according to the analytics firm, represent 0.02% of trading activity tracked to known sources.
When crypto markets surged and easy money was available, the NFT sector saw a large increase in sales. In 2020, there was only a few hundred million dollars worth of sales, but last year’s rally pushed sale volumes; to over $40 billion.
In 2022, the market has been substantially bearish, causing a significant drop in sales.
Even though total NFT purchases appear to be slowing, a recent study from blockchain analysis firm Chainalysis reveals. That the number of NFT purchasers in Qtr2 this year was only surpassed by those seen in Qtr3 2021 and Qtr1 2022.
NFTs are digital assets that are unique and cannot be replicated. They are stored on a blockchain – the same technology that underlies cryptocurrencies like Bitcoin.
Elliptic is a company that provides data and analysis on blockchain activity, including that related to NFTs. The company’s report found that while the value of NFT sales has declined since the peak in Q1; the number of buyers has increased.
This suggests that NFTs are becoming more popular with a wider range of people. Even as the overall value of the market declines. One reason for this could be that NFTs are becoming more accessible and user-friendly.
What do you think about this report? Share your thoughts with us in the comment section!
I have been writing copy for blockchain-related projects since 2017. I understand the importance of being able to communicate clearly and effectively with both technical and non-technical audiences. By leveraging my understanding of the crypto industry trends, I can help increase adoption in this rapidly evolving landscape.
