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Non-fungible tokens (NFTs) have been a hot topic among Singapore’s influencers. Local rapper Yung Raja has been a vocal proponent of the crypto space, often tweeting about his NFT purchases.

Earlier in January, he even announced plans to use NFTs as part of the marketing efforts for his newly-opened cafe, The Maha Co. NFT holders will be entitled to benefits such as exclusive merchandise and meet-and-greet sessions.

Unfortunately, for all the potential that this new innovation offers, it also comes with a dark side.

In March, Yung Raja revealed that over 20ETH (~S$100,000) worth of NFTs had been stolen from his crypto wallet. He had fallen victim to a phishing scam after clicking on a fraudulent link on Twitter.

Yung Raja connected his wallet to a website which he thought was operated by Bored Ape Yacht Club (BAYC), but it turned out to be a wallet drain. He lost his entire collection, which included a VeeFriends NFT worth almost S$70,000 alone.

Although he had the hacker’s wallet address, there was no way to recoup losses. Within hours, the scammer had already resold some of the NFTs on the OpenSea marketplace.

Other members of the crypto community advised Yung Raja to immediately change his wallet address and be more wary in the future. Such scams are extremely common in the NFT space, and victims are often left with nothing but a learning moment.

Taiwanese singer Jay Chou is another renowned personality who lost his NFT collection to a phishing scam recently. He was forced to part ways with almost S$800,000 worth of funds. Chou’s collection included NFTs from BAYC, Mutant Ape Yacht Club, and Doodles.

Following these recent scams, we spoke to Singapore-based cybersecurity strategist Tony Jarvis to find out more about crypto scams and how they could be prevented in the future.

Is there a need for consumer protection in the crypto space?

As it stands, there’s little by way of consumer protection in the crypto space. Decentralised apps and exchanges are largely unregulated and any form of auditing is often self-imposed.

Among the community, scams have been largely accepted as a part of the system. Avid crypto users are aware of the risks involved and know that securing their funds is their own responsibility.

“This includes measures like using trusted computers for transactions, using strong passwords, and avoiding storing large amounts of currency in single accounts or mobile wallets,” explains Tony Jarvis, Director of Enterprise Security, Asia Pacific & Japan at Darktrace.

Image Credit: Tony Jarvis

That being said, there’s only so much that users can do. As more complex scams start to emerge, it’s becoming apparent that crypto exchanges need to play a bigger role in consumer protection as well.  

There are incredibly high-value targets in this space which will continue to attract some of the most sophisticated attacks. Good security practice on the user side is necessary, but it won’t go far enough.

Cryptocurrency exchanges are going to have to take the same advanced measures as banks to protect against an ever-evolving threat landscape. Defensive artificial intelligence (AI) will be a critical part of this, because it can keep (up with the) pace of very fast-changing data environments and spot problems early — before disaster strikes.

– Tony Jarvis, Director of Enterprise Security, Asia Pacific & Japan, Darktrace

The same question arises when it comes to NFT marketplaces. Should OpenSea do more to ensure that stolen NFTs aren’t being sold on its marketplace? Is there a need to vet collections more thoroughly before listing them?

In February, many fell victim to an OpenSea targeted phishing attack / Image Credit: Screenshot of tweet by OpenSea

Jarvis believes that there are still some ways to go before we’re able to answer these.

“What happens in the future will largely depend on whether current processes are deemed to be sufficient, and if customers are adversely affected by any lack in processes being followed,” he says.

How will scams be dealt with in the future?

As crypto scams become more prevalent, innovations in cybersecurity are following close behind. Jarvis believes that this is only natural.

Typically, we see the technology itself mature before security receives the same level of attention.

As crypto becomes more mainstream, and we inevitably see more attacks and breaches hit the headlines, there will be more focus on tightening security. The sad reality is that security is still seen as too much of an after-thought.

– Tony Jarvis, Director of Enterprise Security, Asia Pacific & Japan, Darktrace

One of the main issues with combating crypto scams is the anonymity granted to users in the space.

“It makes it significantly harder to trace funds if they have been fraudulently acquired. An attacker can disappear into the ether once the deed is done. Traceability may improve, but it remains difficult for now,” says Jarvis.

AI technology is proving to be of significant use when dealing with this threat.

“Across our global customer base, our AI technology has discovered and interrupted hundreds of unusual cyber-threats where devices are infected with crypto-mining malware,” he adds.

“As bad actors continue to proliferate, it is crucial that organisations are armed with cutting-edge technology that is capable of not only spotting the subtle, anomalous behaviour indicative of this threat, but taking targeted action to block this activity across the digital business.”

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Featured Image Credit: nme.com / Yung Raja

Also Read: Why are so many young investors now drawn to cryptocurrencies and NFTs?

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Vulcan Post aims to be the knowledge hub of Singapore and Malaysia.

© 2021 GRVTY Media Pte. Ltd.
(UEN 201431998C.)