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How to Avoid Being Scammed While Trading NFTs on Binance? [Guide]

How to Avoid Being Scammed While Trading NFTs on Binance
Justinas
Baltrusaitis
10 months ago
12 mins read

Non-fungible tokens (NFTs) have been a trending topic for the better part of 2021, and scammers have had a field day duping and stealing NFTs from unsuspecting victims. Binance recently launched a marketplace to create, buy, sell and trade NFTs, and in this guide, you will learn how to protect yourself against scammers on the Binance NFT Marketplace.

Introduction

NFTs have been around for a few years now, and they make one of the few popular blockchain use cases. There are people within the blockchain space who have no idea how non-fungible tokens work, but they are aware of other individuals who have become rich by investing in them, and they want in on the action.

Maybe that’s you, and you are considering buying or trading NFTs as an investment. It’s worth noting that with the growing popularity of blockchain networks, so have been cases of scams, hacking, theft, and robbery.

There have been several incidents of people falling victim to scams and hacks where they lose their assets or buy fake NFTs. Some of the leading NFT marketplaces are taking the necessary steps to protect their users against malicious activities, but ultimately, the security responsibility falls on the user.

You need to be aware of how a scammer can dupe you and learn how to protect yourself. It is crucial to constantly lookout for potentially dangerous situations while buying, selling, and trading non-fungible tokens on public marketplaces.

In this guide, you will learn some of the more common NFT scams and how to protect yourself against them. We will focus on Binance’s NFT marketplace, allowing its users to interact with other NFT fans in a safe environment. You will learn what the leading cryptocurrency exchange has done to ensure the safety of its NFT traders and what you can do to complement these efforts. To learn more about this crypto platform, be sure to read our comprehensive Binance review.


Common NFT scams

Scams are common in the public blockchain space, and non-fungible tokens are no exception. There are several different ways to be scammed while trading on Binance NFT Marketplace, but here are the most common ones to be away off and how to protect yourself:

Fake NFT marketplaces

Fake NFT trading platforms are a common scam technique whereby the perpetrator creates a replica of a popular website like Binance’s NFT Marketplace. As part of the con, the malicious individual will attempt to dupe the real platform’s users to give up their private and confidential information, such as login credentials.

Scammers can access the victim’s NFT trading account and steal their assets with this information. Depending on the account holder’s status, they may have access to extra features on Binance, such as creating an NFT. Not all NFT Marketplace users can do this, and if a victim has an account with this feature, the hacker can create fake NFTs and try to sell them using the victim’s account.

To avoid being scammed through the use of fake websites, here are a few measures to take:

  • Always bookmark favorite websites. This way, you do not have to manually input the website address and possibly make a typosquatting error and land on a fake website.
  • Search for the proper address of the NFT marketplace you are interested in visiting on legitimate platforms such as Google or official social media pages.
  • Confirm the website you are browsing by checking the security certificate found on the browser address bar. Ensure that there is a lock symbol next to the website address, and the website uses an SSL certificate by checking whether its address starts with the ‘https://’ characters.
  • Avoid clicking on links within unsolicited emails from supposed Binance support staff. If you need to perform a specific action, always use your usual method of accessing your account.

Brand & artist impersonation

Brand impersonation of popular crypto-focused platforms is an age-old scam not exclusive to NFTs but rather the general crypto investment scene. What is somewhat unique to NFTs is the impersonation of digital artists.

Typically, these scams are executed through ads or social media messages intended to mislead potential victims into thinking that a credible platform is running a promotion and giving away free NFTs.

The scammers will request the victims to submit personal information to be considered for a chance to win exclusive NFTs. The victims could end up giving up their names, email addresses, wallet addresses, and sometimes wallet recovery passphrases. This is critical information that can be used as part of a phishing scam, or if the scammers get their hands on the recovery phrase, they can steal NFTs stored within their victims’ wallets.

For an NFT artist impersonation scam, the perpetrator would typically create a fake NFT, which they will claim to be minted by a famous artist, which they’ll attempt to sell at a discount. Given that anyone can create an NFT of any asset, most scammers opt to steal artwork, download it and create unique tokens without the knowledge or permission of the copyright owner.

To protect yourself from falling for brand and artist impersonation scams, apply the following security and protection tips:

  • Use Binance Verify to check the authenticity of a social media page on Telegram, Discord, Reddit, Twitter, and Facebook. You can also use the service to check the authenticity of a claimed Binance staff member.
  • Avoid any giveaways that seem suspicious, especially those that request a lot of irrelevant information such as names, date of birth, private keys, or even ask you to send a deposit to participate.
  • Research any artwork you are interested in buying beforehand and look for authentication clues such as the official wallet address the creator uses for mining all of their NFTs and the platform on which they list their work. Being thorough in this stage will help you avoid purchasing fake tokens and potentially losing your funds.

Fake Bidding

The fake or deceitful bidding scam is more prevalent on other more established NFT marketplaces such as OpenSea compared to Binance’s platform. However, it is still prudent to be aware of it if the scammers in these other platforms attempt the same on the Binance NFT Marketplace.

In a fake bidding scam, perpetrators will take advantage of the ignorance of the NFT sellers to dupe them into selling at a low cost. In some of these popular marketplaces, the preferred payment method is WETH (Wrapped Ether), a token used to represent Ethereum coin (ETH).

Instead of these scammers using WETH to bid, they use a different coin such as USDC (USD Coin), a stablecoin tracking the value of the US Dollar currency. The scammer would then change their bidding avatar to the WETH logo to confuse the seller that they bid higher than the rest.

If the seller fails to notice the scam, they will rush to sell to the scammer only to realize that the bid was much lower than they thought.

To prevent yourself from falling for the deceitful or fake bidding scam, always take your time before accepting a bid on any platform. Compare other bidders and the sums they are bidding on; check the value column to confirm the bid value and ensure it’s competitive.

How to Secure Your Binance Account

It is vital to secure your Binance account while trading NFTs because the leading exchange platform has integrated all its features. This way, Binance users only need a single account to access the entire Binance ecosystem and its suite of products and services.

In simple terms, your Binance crypto trading account is the same account you will use to stake crypto, lend, mine, participate in the DeFi scene, invest in Launchpad projects, and access the NFT marketplace. Therefore, it is crucial to secure your account as best as you can.

Here are a few tips to help you in your quest for a secure and profitable experience while buying, selling, and trading NFT on the Binance Marketplace.

Verify your Identity

Binance needs to know who you are to prevent others from having unauthorized access to your account. Once you create a Binance account, verify your identity and provide identity documentation before you start trading NFTs.


Create a strong password

A strong password should be the bare minimum level of security you implement on your Binance account. To create a strong password, ensure that you use password generators and management apps to store these complex strings of characters.

You should also remember to change your password regularly for added peace of mind.

Enable Two-Factor Authentication (2FA)

2FA is a common security feature that most online platforms have, and you should take advantage of it to ensure that you provide double security for your Binance NFT account. Binance supports up to three ways to confirm login credentials: SMS, email, and authenticator apps. You should enable all three for maximum security.

Binance also supports using Universal second-factor authentication (U2F) using physical authentication devices like YubiKey. These devices cost money, but the extra security they provide may be worth the investment.

Invest in cold storage wallets

If you are an active NFT trader, then using hot wallets to store your tokens may be necessary, if not sufficient. However, if you are a long-term investor and collector of rare digital art pieces, you need to use cold wallets, which offer better security than their hot counterparts.

Cold wallets store private keys to your digital assets offline, where they cannot be accessed remotely. Most of the hardware wallets in the market support NFTs created on Ethereum and Binance Smart Chain, so it should not be a problem to use one of your available hardware wallets or invest in a new one.

Setup the Binance Anti-Phishing Code

Phishing is a common scam within the blockchain space, and Binance has provided a neat solution for its users – an anti-phishing code. The code allows Binance users to add an extra layer of security by providing an ideal way of differentiating between fake and genuine emails.

Once you set up the code, Binance will attach it to all future emails, thus preventing you from interacting with fake phishing email attempts. This feature helps avoid the fake marketplace scam, and brand impersonation discussed earlier.


Maintain high levels of security hygiene

Security is an ongoing endeavor in which every Binance user needs to partake, and that includes paying attention to every activity that happens within their accounts. As a cryptocurrency investor, you need to educate yourself on how hackers and scammers can steal your assets to prevent it.

You also need to know about all the careless mistakes investors make that can lead to them losing their assets and learn how to avoid them. The best place to learn about all these security aspects is the Binance Academy, a section of the Binance website that offers free resources on all features offered by the exchange.

Binance Academy also provides resources about general crypto investment topics such as introduction to blockchain, buying and selling crypto, and how to mint, buy, sell and trade NFTs and secure your account. There is a lot to learn on the platform that we highly encourage you to take the time to explore whatever may be of interest to you.


Report suspicious activities to Binance

Help Binance identify new scams techniques by reporting any suspicious individuals and activities you may encounter while trading NFTs or crypto. It helps the platform beef up its security measures and keeps the marketplace safe for all traders.


Final thoughts

NFTs represent incredible investment opportunities but before you take off to the races to start buying and selling these tokens, take the time to learn how to do it right. A little patience and curiosity may help you avoid some unfortunate losses down the road.

Frequently Asked Questions on NFT Scams

Can someone steal an NFT?

Yes, NFTs can be stolen by unscrupulous people. Often, scammers dupe NFT owners into providing their login information into Binance, where the scammers transfer the tokens to third-party wallets. In other cases, hackers can steal private keys to wallets that hold NFTs, and once they do, they can transfer these tokens to other wallets or marketplaces where they can sell them.

How do I know if an NFT is legit?

Identifying a legitimate NFT from a fake one is a little complex, but if you invest in the space, you need to know how to do it. There are several ways to identify a legit NFT, including checking the wallet address used to create it and comparing it with one provided by a known artist. You can also ask for a link to your favorite artist’s work and where to buy it to avoid purchasing a fake token.

Another more complicated way to avoid buying fake NFTs is to research the prices of similar tokens on legit marketplaces and compare them with the token you are interested in buying. Often, counterfeit NFTs are much cheaper, but this is not always the case.

How do I protect against NFT scams?

There is no easy way to protect against NFT scams. You have to get your hands dirty by learning about how you can lose your non-fungible tokens and all the available ways to prevent it. Scammers come up with new ways to steal your assets, so you need to be vigilant all the time and keep up with the news and trending security topics to stay ahead of the scammers.

Where can I learn more on how to protect myself when trading NFTs?

The best place to learn about NFTs and how to protect yourself against scammers while trading NFTs is the Binance Academy, which is a resourceful and informative section within the Binance website. Investors use the Binance Academy to educate themselves and learn about all things crypto.

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Justinas Baltrusaitis
Author

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.

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