By far you should have been aware of the hype surrounding NFTs and their promising applications for different purposes (such as serving as collateral for a loan or generating funds for humanitarian relief). However, what is equally important as the newest trends and developments in NFTs, as reported, is to spot and avoid potential NFT-related frauds and unlawful activities in this rapidly growing world.
In general, rug pulling has been the most commonly-seen scheme in the world of NFT and has resulted in tremendous loss of NFT holders and prospective purchasers. Wash trading, as compared to rug pulling, is not illegal per se because relevant laws may or may not be applicable to such activity, but more often than not it is ethically questionable and could result in undesirable consequences. Below we take a quick look at the nature of those schemes and explore how an ordinary NFT holder and/or purchaser could avoid falling victim with adequate due diligence efforts.
Rug pulling
As the name suggests, rug pulling means a type of exist scam where an individual(s) promises to develop and deliver NFTs to prospective NFT purchasers, but subsequently (and abruptly) run away with the funds collected for the development without fulfilling the promise. Rug pulling is in nature very similar to old scams that have existed for years despite the fact that scammers in NFT could easily reach a large number of victims with modern technology (e.g., by disseminating a rug pulling project…
