Crypto Marketing with Ty Smith
The Most Common NFT Scams & How to Avoid Them | Ep 57
About this episode
Ty Smith, CEO and founder of Coinbound, runs through the scams that show up most often in the NFT world and gives practical ways to spot each one before it costs you money. He covers rug pulls, market manipulation through wash trading, counterfeit collections that copy popular projects like Bored Ape Yacht Club, and MetaMask phishing attempts that go after seed phrases.
For each scam, Ty explains the mechanics first, then the tell. Rug pulls come down to vetting whether a team is doxxed and whether their roadmap passes a basic smell test. Market manipulation, like the reported $20 million CryptoPunk sale to a self-owned wallet, gets exposed by checking overall collection trade volume and looking for overlapping wallet addresses instead of trusting a single headline sale. Counterfeit collections can be avoided by checking for OpenSea's blue verification checkmark and only navigating to a collection through the link on its official website. MetaMask phishing scams rely on fake support accounts asking for a seed phrase or a QR code scan, something real MetaMask support never does because it barely offers direct support at all.
Ty closes with the reminder that NFTs remain a profitable and fun space, but one that requires ongoing caution given how frequently these scams show up.
Key takeaways
- Check whether an NFT team is doxxed before investing, since public identities make rug pulls far riskier for the scammer.
- Apply a smell test to any roadmap: if the promises or the team's capability don't add up, treat it as a red flag.
- Judge NFT value by overall collection trade volume, not a single headline sale, to spot wash trading and market manipulation.
- Look for overlapping wallet addresses between buyers and sellers on Ethereum to catch self-dealing.
- Only buy from a collection using the OpenSea link posted on its official website, not by searching the name directly.
- Confirm a collection's blue verification checkmark on OpenSea before treating it as the authentic project.
- Never share a seed phrase or scan a MetaMask QR code for anyone claiming to be support, since MetaMask has no dedicated support team that would ask for that.
Questions this episode answers
What is a rug pull in NFTs?
A rug pull is when a team launches an NFT collection with promises of building a community, hitting goals, or landing partnerships, collects money from buyers, then fails to deliver and disappears with the funds. Ty Smith notes it can be intentional or unintentional, meaning some teams simply lack the capability to follow through rather than planning a scam from the start.
How can you avoid an NFT rug pull?
Vet the team before buying in. Look for a doxxed team that is public and identifiable, since that makes them easier to track down and hold accountable. Also apply a smell test to the roadmap: if the promises seem unrealistic or the team doesn't look capable of pulling them off, treat it as a red flag.
What is market manipulation in the NFT space?
Market manipulation happens when someone buys their own NFT from a second wallet they control to artificially inflate its perceived value, hoping another buyer will bid even higher. Ty Smith points to a CryptoPunk that reportedly sold for around $20 million this way. To spot it, check overall collection trade volume rather than a single sale, and look at wallet addresses for overlap between buyers and sellers.
How do counterfeit NFT collections work and how do you spot them?
Scammers copy the images, titles, and descriptions of a popular collection like Bored Ape Yacht Club and list an identical-looking set on OpenSea to trick buyers. Look for the blue verification checkmark, which collections earn after hitting a certain trade volume, and only access a collection through the link posted on its official website rather than searching for it directly on OpenSea.
Does MetaMask have customer support that asks for a seed phrase?
No. Ty Smith says MetaMask has essentially no dedicated customer support beyond its own documentation, so anyone texting, emailing, or messaging on Twitter claiming to be MetaMask support is running a phishing scam. Never share your seed phrase or scan a MetaMask QR code for anyone, since that QR code syncs mobile and desktop access and can hand over full control of your wallet.
Full transcriptShow
Ty Smith0:00
What is up guys, welcome, welcome. I am Ty Smith, CEO and founder of Coinbound, the largest NFT marketing agency. Today we are discussing the most common scams in the NFT world. So we'll do a quick overview of the top most common scams, how they work, and how to avoid them. Let's dive into it.
Ty Smith0:20
Alright, number one is rug pulls. Rug pulls are when an NFT collection basically launches an NFT collection, makes a bunch of false promises that they're going to build certain communities, accomplish certain goals, make certain partnerships, whatever it is they say they're going to do, and essentially they don't fulfill those promises. So they will launch the collection, collect money from investors or people that think they're buying into something, and then essentially take the money and run. It's a crappy situation when it happens. It happens way too frequently in the NFT world. It's honestly probably one of the more difficult things to suss out before it happens, but there are some tips to avoid letting that happen to you.
Ty Smith1:02
The main step is properly vetting the team. This is easier said than done, but it is an important step. There's no clear-cut way to say this team has good intentions or not, but seeing things like a team that is doxxed, meaning they're not anonymous, they're public, you can see who they are, you can find them on social media, makes it much less likely that they will rug pull just because they can be tracked down and sued. So that's one step to avoid it.
Ty Smith1:34
Beyond that, it's really just kind of using the smell test. If the website of the NFT collection is saying that they're going to do all these crazy things that don't seem realistic, or they don't have a team that seems to have the capability of pulling these things off, you may be subject to a rug pull. And rug pulls, it's important to understand they're not always intentional. We think of rug pulls as a malicious action that these people made false promises with no intention of it. Sometimes they honestly do have the intention of launching whatever it is they say they're going to, and just don't have the capability of doing it. So there are kind of two distinctions between intentional and unintentional rug pulls, but nonetheless, it is something to be aware of.
Ty Smith2:19
The next scam to look out for is market manipulation. So as with any unregulated, I don't want to say securities, but anything that holds value online, there are people that want to game the system, want to get a high price for something that they own that they bought low. In market manipulation in the NFT world, someone essentially buys the NFT from themselves. And the reason to do that is they want to artificially inflate what the market sees as the correct value for an NFT. So this happened recently with CryptoPunks. I forget what the value was, but someone bought a CryptoPunk for like $20 million from themselves with the intention of making it seem like that NFT was worth $20 million, and I think hoping that someone else would come in and either bid $15 million or $20 or $25 million, and they could make a quick couple million dollars. So that's how that works.
Ty Smith3:13
How to avoid that is checking overall trade volume rather than just the sale of one NFT. It's easy to spoof the sale of one NFT. It's difficult to do it for an entire collection, or at least very expensive in gas fees and exchange fees. So look at overall trade volume of the collection, look at the addresses that are buying and selling the NFTs, see if there is any overlap because the cool thing about Ethereum is you could see if it's the same address buying and selling. Don't discount the possibility that someone has multiple addresses and is wash trading them between them. When that happens, you can still track it back in some sense, it just takes a little bit of work. So watch out for market manipulation in the NFT world.
Ty Smith3:57
The next scam is counterfeit collections. So how this works is someone will essentially copy the images of a popular collection of NFTs, launch their own collection on OpenSea using those images, and make it appear very, very similar if not identical to the original collection. So someone might take images from Bored Ape Yacht Club, launch 10,000 Bored Ape Yacht Clubs that look identical with the same description, with the same title, with the same everything on OpenSea in hopes that they are fooling someone into buying it.
Ty Smith3:58
So, how this works is someone will essentially copy the images of a popular collection of NFTs, launch their own collection on OpenSea using those images, and make it appear very, very similar, if not identical, to the original collection. So, someone might take images from Bored Ape Yacht Club, launch 10,000 Bored Ape Yacht Clubs that look identical with the same description, with the same title, with the same everything on OpenSea, in hopes that they are fooling someone into buying it.
Ty Smith3:59
So, how this works is someone will essentially copy the images of a popular collection of NFTs, launch their own collection on OpenSea using those images, and make it appear very, very similar, if not identical, to the original collection. So, someone might take images from Bored Ape Yacht Club, launch 10,000 Bored Ape Yacht Clubs that look identical with the same description, with the same title, with the same everything on OpenSea, in hopes that they are fooling someone into buying it.
Ty Smith4:32
The ways to avoid this is with the popular NFT collections, they get a blue checkmark. So, they are verified essentially, just like any other social media. Look for that. They get verified once they hit a certain amount of trade volume, so that's another thing to look out for, is look at the entire collection's trade volume. If it's very low and it's a popular collection, clearly something is wrong.
Ty Smith4:55
Another way to do this is go to the website of the collection, and they almost always have a link to the OpenSea collection. So, use that link and only that link rather than typing in, for example, "Cryptopunks" into the search bar in OpenSea.
Ty Smith5:13
Next and final scam that we're going to cover today is MetaMask phishing scams. So, the way this works is someone who is pretending to be from MetaMask reaches out, saying they're from MetaMask support. Usually, this is via text message, email, or Twitter, and they'll say there's an issue with your MetaMask, we're going to help you fix it. To do this, you have to send us your seed phrase, or you have to scan the QR code that gives access to your MetaMask, and then we're going to fix it for you. No one from MetaMask support will ever ask for your seed phrase.
Ty Smith5:47
As far as I know, MetaMask has almost no customer support other than just documentation on their website. So, the ways to avoid it would be never give your seed phrase to anyone, including MetaMask. And then, the QR code that's on that opens up, it's especially used to sync your mobile phone with the desktop version of MetaMask. Don't scan that, don't give that to anyone, don't do any video sharing that then exposes that. That's something that's happened to people in the past, because doing so gives them access to your MetaMask and all the funds on it.
Ty Smith6:21
So, if you're going to try to get support for something MetaMask-related, again, I don't think MetaMask has any dedicated customer support. I could be wrong about that, but regardless, to be on the safe side, don't contact anyone that says they're from MetaMask support. Instead, use the documentation that's been outlined on MetaMask's website, or watch there's tons of YouTube walkthrough videos on how to fix essentially every issue there is with MetaMask. So, use those resources.
Ty Smith6:51
All right, so that is going to wrap up all of the NFT scams that we are covering today. Those are the top four or five of the most common ones. There are a lot of scams, unfortunately, in the NFT and Web3 world. So, always be cautious, but it is, at the end of the day, a very profitable, very fun industry to be involved in. Just exercise caution. As always, if you like this video, remember to subscribe, and we will catch you on the next one.
