Value of NFT fraud plummets 82% in UK

Nearly £145K worth of NFTs reported as stolen through scams last year

This compares to more than £800K the year before

NFT values have seen dramatic collapse since peaking in September 2021

Data collated by Action Fraud shows the value of NFT-related fraud has fallen from £822,307 in 2021/22 to £144,007 in 2022/23¹.

Dan Wyatt, Partner at RPC, says: “Fraudsters often prey on the fear of missing out. The sharp drop in NFT values over the last 12-18 months means it’s now a lot harder to persuade victims that they risk missing out on huge gains if they don’t invest in NFTs.”

NFT trading volumes tumbled 97% from $17.2bn in January 2022 to just $466.9mn in September of that year. The hugely popular Bored Ape Yacht Club NFTs, many owned by celebrities, have also seen their floor price drop 88% from $429,000 in April 2022 to $52,000 in July 2023. 

Wyatt adds: “While scammers are still relatively active in the world of cryptocurrencies, these figures show that NFT-related fraud is tailing off noticeably – at least for now.”

Some of the most common types of NFT fraud include:

• Phishing – where a scammer attempts to get a user to click on a malicious link, potentially giving the fraudster access to the user's NFT – this is often attempted on social media
• Pig butchering – an umbrella term for long-term scams in which fraudsters ‘groom’ victims before defrauding them, for example by encouraging them to invest in fraudulent schemes and disappearing with their funds
• Rug pull scams – unscrupulous NFT developers hype their project on social media only to abandon it once they have attracted investment
• Wash trading – fraudsters trade NFTs back and forth at an inflated price to make it appear as though the inflated price is the true market value of the asset and that there is a greater level of demand for the asset than is the case

Dan Wyatt says another potential factor behind the drop in value of NFT fraud may be a smaller pool of potential targets. Many serious collectors are not currently trading in NFTs, choosing instead to wait for asset prices to recover, which has meant they are less exposed to scammers.

Victims of NFT fraud can consult CFAAR – the Crypto Fraud and Asset Recovery network, jointly founded by RPC. CFAAR is an international network consisting of legal professionals, forensic accountants, corporate intelligence officers and asset recovery experts. It was established as a resource to speed up legal action regarding digital asset-related fraud, including NFTs.

Claims involving NFT fraud can be pursued in the English Courts in a similar way to claims involving cryptocurrencies. This is illustrated by a notable High Court case  which held that it was arguable that NFTs were legal property and therefore could be the subject of injunctions. 

Chris Whitehouse, Senior Associate at RPC, explains: “England has carved out a reputation as a globally important jurisdiction for cryptocurrency and NFT disputes. The courts have proven remarkably agile and have demonstrated willingness to help victims of crypto and NFT fraud. There is arguably no better jurisdiction to bring such claims.

“It is important to remember that victims of NFT fraud must act quickly to maximise their chances of recovering a stolen NFT. In practice fraudsters will try to sell such NFTs as quickly as possible and then disappear with the sale proceeds, so swift action can have a big impact on a victim's ability to recover their stolen asset.”

 _{1. Action Fraud, which collates data from police forces throughout the UK. Year-end March 31st}