Expert Warns of NFT Scams, Some Faking Patrick Mahomes

KANSAS CITY, Mo. — For decades, stores like The Baseball Card Store in Overland Park, Kansas, have been a hub for local sports fanatics, but the latest sports collectible isn’t something you’ll find off a shelf.

Non-fungible tokens, often referred to as NFTs, are digital works of art that can set you back thousands and can only be purchased with cryptocurrency, a form of digital currency whose value can fluctuate wildly.

In 2021, someone shelled out $246,000 in cryptocurrency for a Patrick Mahomes NFT titled “Mahomes Magic,” purchased on MakersPlace.com, the exclusive site for Mahomes’ personal NFT collection.

While some NFTs, like “Mahomes Magic,” are legitimate, Yoav Keren, CEO of Brandshield, which helps companies fight fraud and counterfeiting, said the NFT world is full of scammers and content creators who violate the likeness of public people, especially on platforms. which is not regulated by an established organization, such as the NFL or NBA.

“But if you decide to buy an NFT, do your research and make sure you’re buying from an official entity,” Keren said.

The NFL’s official NFT platform is NFL All Day and the NBA’s is NBA Top Shot.

Scrimmaging with cheaters

Cryptocurrency fluctuates so much that some creators of NFT company Bored Ape Yacht Club (BAYC) are being sued for allowing sports stars, such as tennis legend Serena Williams and Golden State Warriors star Stephen Curry, to promote NFTs whose values ​​fell dramatically after heavy buying.

The complaint filed in December alleges celebrity endorsements artificially inflated the interest and value of the BAYC NFTs and Yuga Labs’ Apecoin crypto-tokens, resulting in a “simmering” loss for buyers.

With the rise in NFT interest, enter scammers who aim to profit from the likeness of celebrities without their consent, Keren said.

“Specifically, in the sports industry and the Kansas City NFL, Patrick Mahomes is an example of imitation of sports themes,” he said.

Anthony Felicetti, a longtime crypto enthusiast who buys and trades NFTs, said he is confident in his purchases because he only interacts with sellers who maintain a significant blockchain.

A blockchain is a decentralized, digitally distributed, public ledger used to record transactions across a network. The entry cannot be changed retroactively without the consensus of the network.

“So I could search and follow this person and I could look at literally all the activity that they’ve ever done,” he said.

Blockchains allow NFT consumers to verify whether a person is really sending the buyer their NFT upon purchase. It also reveals how much someone bought the NFT for, as well as the date the transaction was completed.

But when it comes to NFTs depicting celebrities and athletes, Felicetti said he doesn’t bother buying unless he’s sure it came from a regulated marketplace, like DraftKings, regulated by the Alcohol and Gaming Commission of Ontario.

“So, somebody just says, ‘Oh, I’m starting this thing, it’s Patrick Mahomes,’ I wouldn’t do that,” he said. “I need to know where it’s coming from.”

Fumbling for decentralization

Jordan Neal, an employee of The Baseball Card Store, said he has doubts about the long-term success of the NFT market.

“A regular person can just walk in here and buy a pack of sports cards and enjoy it, but if they want to buy a piece of digital art or NFT, they have to sign up with a bank account and transfer money and things like that,” Jordan Neal, employee of The Baseball Card Store, said. “It’s just prohibitive.”

Julian Zugazagoitia, executive director of the Nelson Atkins Museum of Art, said he’s keeping an open mind, although he’s not ready to buy a piece just yet.

He said in some ways, the digital art market is similar to other once-considered new forms of art.

“But if you think about the beginning of photography or a new medium like that, there’s always a bit of hesitation,” he said.

He said the fact that people are actively counterfeiting NFTs means there is a reality around them that should not remain unknown.

“I think again, there’s a lot of responsibility for different states to regulate this so that people can safely invest or have their assets,” Zugazagoitia said.

But Felicetti said regulation is something the crypto world is fighting against.

“There’s nobody policing it right now and so it’s decentralized and that’s what we’re trying to keep and make sure nobody is able to tax what they’re doing,” he said.

He said it’s a great market for new artists.

“How else can you have an idea and make it come to fruition?” he said. “If you needed $300,000, well, that’s probably steep — if you needed a handful of money to support your idea, to me, this is one of the best ways to do it.”

Keren said that to successfully engage in the world of NFTs, you need to understand the currency, the market and be careful about which platforms you buy from.

“If you do this, you will be buying the real thing and not the fake,” he said.

He said he believes the NFT world needs to be tightly regulated to protect consumers, content creators and ideas.

“One of the ways to combat this is to monitor these marketplaces, detect these NFTs and take them down,” Keren said.