This month, one of Nike’s top virtual-collectibles executives had an estimated $173,000 worth of NFTs stolen from his crypto wallet.
Experts believe the assets will not be recovered, but there are simple ways to protect NFTs.
An NFT is a type of digital collectible. Consider it a virtual painting or baseball card.
Nikhil Gopalani tweeted on January 2 that he had been hacked by a “smart” phisher. Gopalani is the chief operating officer of RTFKT (pronounced “artifact”), a buzzy digital collectibles company acquired by Nike that is a critical component of the sportswear giant’s metaverse strategy.
Gopalani said in a tweet that the phishers stole his Clonex NFTs and other digital collectibles, including some “Cryptokicks.” RTFKT and Nike collaborated on the Clonex NFTs. Nike’s first virtual sneakers were Cryptokicks. The stolen NFTs were valued at $173,000.
Although Gopalani and Nike did not respond to Insider’s requests for comment, experts said the theft is not indicative of fundamental underlying issues with RTFKT, NFTs, or the metaverse.
“It happens to everyone,” said Emmanuel Udotong, CEO and cofounder of Shield, which provides security for web3, a version of the internet that uses blockchain, the distributed ledger that underpins NFTs.
“The takeaway should be that anyone can be scammed no matter how smart you are or how much experience you have in the space,” Udotong said. “You have to take extra precautions.”
According to Udotong and Avivah Litan, a Gartner blockchain analyst, it is critical to be proactive because there are few safeguards in place for people whose NFTs have been stolen.
“It’s very early days for fraud protection on blockchain,” Litan said. “You can see where the stolen goods go. That doesn’t mean you can get them back.”
Elliptic, a blockchain research firm noticed that $100 million in NFTs were stolen in the fiscal year ending July 2022, with the average scam resulting in a $300,000 loss.
How can I keep my NFTs safe?
Here are three simple steps that Litan and Udotong recommend users take to prevent NFT theft:
Always be on the lookout for potential threats.
“The only thing an average user can do is be completely diligent all the time,” Litan explained. “Always be on the lookout. Always be suspicious.”
Banks must know who their customers are. NFT collectors should follow suit. What do you know about the other party in the transaction? Keep an eye out for people who want to transact quickly and have low-volume accounts.
“Typically scams don’t do that much in volume,” Udotong told Insider.
The advice could have aided Gopalani, who appears to have fallen victim to a phishing scam involving a familiar phone number and Apple ID.
Don’t keep all of your digital assets in one place
Diversification is a term used by financial advisors. The same advice holds true for digital assets. Divide them among several crypto wallets. If one is compromised, the others should be safe. Hardware wallets are an additional option. “It’s like a little piggy bank for your crypto,” Udotong explained.
Hardware wallets keep digital asset keys offline, making them inaccessible to cyber criminals.
Purchase some tools.
Most people are familiar with basic antivirus software, such as McAfee. There is also a growing set of tools for managing digital assets.