On Feb. 8, artist Karan Singh notified via Twitter, the blockchain-based art platform Rarible that some of his work had been fraudulently listed.

Crypto Briefing  |   14 February 2020

Although the issue was quickly resolved, the NFT space has since been debating how to prevent future incidents.

Crypto Art Heist

The primary selling point behind tokenizing works of digital art is that these tokens are visible on a public blockchain. The owner, creator, and points of sale can all be tracked throughout the life of the work.

In many cases, hosting platforms, like Rarible, will mint these tokens using Ethereum. Other competitors in the space include KnownOrigin and SuperRare, for instance.

Once an artist uploads their digital work and the work is converted to a tradeable ERC-721 compliant token, artists can then auction the piece. Buyers take solace in the non-fungibility of the token and trust that they are the true owners of the digital creation.

This is in part what makes the NFT, non-fungible token, space so promising. Blockchain technologies allow artists to reach an audience as wide as the Internet while preserving their work’s scarcity.

In the latest debacle, however, this trust may have been breached.

Last Saturday, Karan Singh, a Brooklyn-based digital artist who has also worked with the likes of Apple, reported a fraudulent copy of his work on Rarible.

“This is actually my work,” he tweeted, linking to his Instagram account. “And so are all of these. [Take] them down.” Another user posing as Singh had sourced the artist’s work and then placed them on sale at Rarible, according to Ilya Komolkin, a co-founder of Rarible.

The platform ultimately mitigated much of the blowback. Singh’s quick response helped keep the fraud under relative wraps and prevented the imposter from making off with any serious money.

Since then, members of the NFT community have posed various solutions to prevent such events from happening again.

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1,001 Governance Proposals

“If I would be a thief, I’d download some works from [KnownOrigins], and put them up for sale on SuperRare,” said Robert Hoogendoorn in an interview with Crypto Briefing. “No way they will be able to tell. I’d be making money with somebody else’s work. That’s a problem that needs to be addressed.”

Hoogendoorn is the editor of Play to Earn, a newsletter that digs into the ins-and-outs of NFTs and blockchain gaming. He’s also the author of a proposed Digital Art Foundation, an open protocol where crypto art platforms like Rarible could corroborate uploaded work.

The idea has yet to manifest in any concrete development, but it has sparked discussion about how to solve crypto art fraud.

If the digital art market ever grows to the size of the traditional art market, writes Hoogendoorn, such incidents would demand legal action.

Community Director of Counterparty Foundation, Bench, has another, much older idea. For reference, the Counterparty Protocol allows users to build smart contracts on top of the Bitcoin blockchain

When asked how artists can best ensure that platform’s are protecting their work, Bench wrote simply, “by not trusting the platform lol,” in the RareAF Telegram channel. RareAF is a series of digital art festivals held every year in New York. This year will be its third round.

Instead of hoping that art platforms like Rarible do their due diligence and verify that a user is indeed authentic, Bench recommends hashing the token tied to a particular work of art.

Proposed in 2016, the first implementation was on a Rare Pepe card called “CHYNAPEPE” and leverages the Counterparty Protocol.

Once a hash is made of the asset using the Counterparty Protocol, it is then viewable using a Counterparty blockchain explorer. “The Counterparty token system also provides a secure way to transfer ownership, without the use of a trusted third party (unless you consider a decentralized exchange to be a third party) or escrow service,” wrote Bench in 2016.

It would also function on any given platform, including Rarible according to Bench. He told Crypto Briefing:

“You could use the concept we publish, [generate] a hash, [and include] that hash in the token details on any platform (as long as they allow you to insert a little ‘description’ metadata in the platform).”

Still, there are issues with both the cryptographic hash and forming a Digital Art Foundation recommendations. In regards to the first, users still trust that the person creating the hash is doing so in good faith. Rather than solving the problem, it is simply moved further upstream.

In the case of a Digital Art Foundation, it may lead to further centralization according to James Waugh, a co-founder RareAF and community manager at Enigma. “Overall, the downside of governance is unnecessary consolidation of power,” said Waugh in an interview. “Token-weighted votes are often plutocratic.”

Cryptocurrency is going mainstream, so are the scams

A quick peek into the future: These scams will get more complex and sophisticated. Scammers will keep innovating to make sure users fall for these. Not just NFTs, when buying anything online, a buyer needs to be aware of where and to whom they are giving away their credit card or banking information.

More info ►►  Checkphish, an AI tool to detect online fraud in real-time. If you come across a suspicious link, scan it here before accessing it.

5 NFT Scams for Agora Digital Art

5 NFT Scams you need to know – NFT Scams Part-1

1. Replica Stores

The problem of replica stores is well versed in the world of online fraud. Scammers spin up websites that look exactly like the original ones and try to trick users into either logging in with their credentials or give away their credit card information. At Bolster, we see online stores across several industries being targeted, and stores selling NFTs would be no exception.

The number of suspicious-looking domain registrations with names of NFT stores like ‘rarible’, ‘opensea’, and ‘audius’ have increased nearly 300% in March 2021 when compared to previous months.

The replica NFT stores could look very similar to the replica RayBan store. They will be using a legitimate NFT stores’ logo, have a similar website layout, and sell NFTs available on the legitimate store.

2. Fake NFT Stores

A variation of the replica NFT stores is the fake NFT stores. These stores might not be using logos and content from legitimate stores, but instead use non-affiliated logos and content and sell NFTs that do not exist. These stores try to cash in on the shopper frenzy.

Here is a look at why we think this will be a problem.

Suspicious registrations like these are indicators of what is to come. To spin up a phishing or counterfeit page, scammers need to register a domain first. Numbers in the March 2021 column are till 13 March 2021. We estimate these numbers to double by the end of the month.

3. Counterfeit NFTs or Artist Impersonation

If you were following NFTs in the recent weeks, you would be aware of the Banksy-styled artworks sold on the NFT markets for $1 million in crypto. Although I do not want to get into whether that was a copyright/ trademark issue, this sets a precursor for what is to come.  Counterfeit and real-world ‘inspired’ artwork/content will become a  problem shortly. Users need to be careful about what they are buying or bidding. It is difficult to verify the seller on such online marketplaces.

4. Giveaways/ Airdrops

Wherever there is crypto, there are giveaway (/airdrop) scams. At Bolster, we detect thousands of such scams every month. They target famous cryptos as well as brands and personalities associated with them. In these scams, scammers target crypto enthusiasts by offering them free crypto/ NFTs/ tokens related to NFT marketplaces.

Here is a giveaway scam targeting users of Rarible and their RARI token.

5. Brand Impersonation on Social Media

The crypto community is extremely active on social media channels like Telegram and Discord. On both these channels, scammers set up groups targeting almost all the brands in the crypto space. Most of these groups claim to be the ‘official support’ or ‘official community’ of the targeted brand.

These groups are used to carry out the scams we mentioned above. Here is a screenshot of the numbers of groups claiming to be the Rarible.com Community.

Users need to be extra careful before joining these groups. In the case of NFTs, we are expecting more such groups to pop where the scammers will also try and sell fake or non-existent NFTs to users.

If someone sends you a link to join these communities, make sure to verify that you are joining the real one. In most cases, a simple Google/ Twitter search can help you find the right community or group.

We also expect scammers to spin up groups that start calling themselves official. Here is an example of the number of Polkadot ‘official’ groups we found on Telegram by just performing a simple search.