Scam or guerilla marketing?
A series of posts by an NFT market observer has revealed that celebrity and influencer NFT holders are being targeted by an NFT minting scam. The complex scam involves the wallets of Pranksy, Shaquille O’Neal, Snoop Dogg, founder of Pudgy Penguins Cole Thereum, NFT Influencer Zeneca_33, and more.
The NFT market is currently dominated by smart money buyers and whales. These actions set the floor and ceiling prices of most NFT collections. Professional NFT traders use analytics tools to track wallet movements to follow smart money and influencers. These tools show them who buys what, when, and where. A history of mints, buys, and sells is available. But, the data cannot directly distinguish between a buy and a mint. This is a key point.
According to NFT market observer OKHotshot.eth the scam automatically mints NFTs to certain wallets. In order to get the attention of pro traders, notable buyers need to buy in. So the scammer wrote code that reacts when a buyer mints. The same transaction airdrops separate NFTs to notable buyers such as Snoop Dogg. Since the airdrops are hidden inside the transaction they’re seen as mints instead of free drops. Pro traders believe that Snoop aped in, they do the same.
Looking in Snoop Dogg’s wallet reveals he does in fact hold 101 Bored Ape Mirror Club NFTs with a combined value of around $8,000.
Using the single NFT page for a specific NFT we can see that OKHotshot.eth’s suggestion that a mint and a sale are indistinguishable is correct. It appears Snoop bought the NFT for 0.03 ETH, in fact, he minted it for that amount. Diving into 10 of the other 101 we saw the exact same pattern.
How it works
In a nutshell, if an investor sees that a wallet they are watching mints an NFT they may want to get in early to secure the highest margins of profit on a resale. The tweets go on to explain that the scammer created a smart contract for his NFT project, Bored Ape Mirror Club and set up a site, and made a #BAYC derivative nft. The scammer also created the Swimmy Sharks NFT collection but we will keep the focus on the Bored Apes derivative.
When visitors go to the website to mint the NFT, the person receives their NFT with no issues. The NFT then arrives in the person’s wallet. To most, everything is completely normal here. The buyer has no clue what’s going on. The reason being, the scammer isn’t targeting the buyers, he’s actually baiting the pro traders.
In order to get the attention of pro traders, notable buyers need to buy in. So the scammer wrote code that reacts when a buyer mints. The same transaction airdrops separate NFTs to notable buyers such as Snoop Dogg. Since the airdrops are hidden inside the transaction they’re seen as mints instead of free drops.
This is where the debate will focus. Is this smart guerilla marketing, or all-out scamming? It can be debated and argued in either direction. Still, NFT whales are being suckered. Disguising the airdrops as mints fools the pro traders that notable buyers are diving into the NFT collection. And they buy-in as well, effectively getting conned.
The scammer used an unverified contract on the blockchain. Due to the efforts of OKHotshot.eth decompiling the code and searching through it we see a selection of influential people in the NFT space. See for example CozomoMedici a.k.a. Snoop Dogg’s wallet in the list.
Furthermore, line 353 shows all the influencer wallet addresses that are being packaged with the real mints. You can find an unverified contract here on Etherscan. Going further, OKHotshot.eth pointed out that in this instance he found the scam and outed it. But the scammer uses the same code for their other Swimmy Sharks collection here: 0xaa4073916d9b03efec574d01ba94925653285cce.
Using the DappRadar Portfolio we can look inside the wallet address to reveal a balance of almost $57,000 in ETH. More interesting is that there are no NFTs in this wallet and that on the 5th of October the wallet held only around $4,000 in ETH. They have been busy, it would appear.
As mentioned, this scam is targeting high-end influencers and celebrity wallets. That’s not to say lower value investors wouldn’t be affected by this if using analytics tools to track wallet movements. In conclusion, it’s advised to not mint any BoredApeMirrorClub or Swimmy Sharks NFTs. We will continue to follow the story as more information comes to light.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in ETH, BTC, ADA, MATIC, SAFEMOON, HEX, LINK, GRT, CRO, OMI, USDT, SOL, SHIBA INU, AVASTR, RAY, BOSON, AND OCEAN