Author: Nicola Sharp 9 September 2021
A hacker returned $336,000 to a collector who he had tricked into buying a fake Banksy Non-Fungible Token'>NFT that was advertised through the artist's official website.
The link to an online auction for the NFT (non-fungible token) was posted on a now-deleted page of banksy.co.uk. and the auction ended early after the collector offered 90% more than rival bidders. But a spokesman for Banksy said that the artist had no connection with the NFT auction.
An NFT is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique. They are used with artwork to create a digital certificate of ownership.
The collector who was duped believed he was buying the famously secretive artist’s first ever NFT. But he soon received an anonymous tip-off that the sale may have been a fraud. He came to realise that Banksy’s site had been hacked and that he had lost his money to an elaborate scam. Yet he later announced that the hacker had returned all of his money, apart from a £5,000 transaction fee.
The collector has said that he suspects that it was the hacker himself who told him and others that the sale was not genuine.
But while the collector in this case has had most of his money returned, it highlights the increased risk of NFT-related fraudulent activity. With NFTs fast becoming a regular feature in the art market there is greater potential for them being used as a vehicle for fraud.
This high-profile case underlines the concerns that many have about the security surrounding trading in the NFT art market, and the need for buyers and sellers alike to conduct thorough due diligence.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.