On-chain investigator ZackXBT has revealed that approximately $1 million in cryptocurrency has been stolen from various NFT protocols in the past week by hackers posing as IT insiders. These malicious actors infiltrated Web3 projects and exploited minting mechanisms to illicitly gain profit.
The affected entities include Favrr, a Web3 fan-token marketplace, and NFT projects Replicandy and ChainSaw, along with other unnamed teams. The hackers exploited the minting mechanism within these NFT projects, minting large quantities of NFTs, selling them off, and causing the price floor to crash to zero as they extracted their profits, according to ZackXBT.
Following the exploits, the stolen funds were transferred through exchanges and multiple wallets. According to ZackXBT, the funds stolen from ChainSaw have largely remained dormant, while the crypto pilfered from Favrr was transferred to nested services.
The infiltration of crypto and blockchain projects by malicious software developers remains a significant problem in the industry, resulting in financial losses for users and undermining the efforts of software development teams globally. This issue is further exacerbated by the increasing prevalence of remote work arrangements, which hackers and threat actors exploit to gain access to companies, blockchain projects, and Web3 firms.
This is not an isolated incident; malicious actors have been known to infiltrate companies, blockchain projects, and Web3 firms by exploiting remote work arrangements. In November 2024, cybersecurity researchers identified a hacking team with ties to the North Korean government, known as "Ruby Sleet," infiltrating aerospace and defense contractors in the US. These hackers also targeted information technology firms by infiltrating the organizations, setting up fake recruitment initiatives, and using social engineering scams.
The NFT market, while built on blockchain technology intended to ensure secure, trustless interactions, is not immune to vulnerabilities. The technology is still maturing, and these vulnerabilities can expose NFT users to fraud and potential investment losses. Market manipulation, including tactics like wash trading (selling NFTs back and forth between controlled wallets), can create a false impression of high demand and volume, deceiving investors. "Pump and dump" schemes, similar to those seen in stock markets, involve heavily promoting NFTs to inflate prices before the orchestrators sell off their holdings, leading to a price crash and losses for other investors.
Phishing scams also pose a threat, with scammers using deceptive emails or messages to trick users into revealing their private keys or clicking malicious links, granting access to their digital wallets and stored NFTs. Smart contract vulnerabilities can be exploited by hackers to steal NFTs or funds. The relative anonymity of NFT transactions can also attract individuals seeking to launder money.
In light of these and other crypto-related scams, experts recommend that both businesses and users prioritize security. It is crucial to stay informed about the latest scam tactics and implement robust security measures to protect crypto assets.
