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Experts warn of NFT scams, some spoofing Patrick Mahomes

KANSAS CITY, Mo. – For decades, stores like The Baseball Card Store in Overland Park, Kansas have been a go-to spot for local sports fanatics, but new sports collectibles aren’t something you’ll find on a shelf.

Non-fungible tokens, commonly referred to as NFTs, are works of digital art that can save you thousands and can only be purchased with cryptocurrency, a form of digital currency where the 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 website for Mahomes’ personal NFT collection.

While some NFTs, such as “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 infringe on character likenesses public, especially on platforms that aren’t regulated by an established organization, like the NFL or the 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 official NFT platform of the NFL is NFL All Day and that of the NBA is NBA Top Shot.

Scrimmaging with scammers

The cryptocurrency fluctuates so much that some creators of the NFT company Bored Ape Yacht Club (BAYC) have been sued for allowing sports stars, such as tennis legend Serena Williams and Golden State Warriors star Stephen Curry, to promote NFTs whose values ​​have dropped sharply after heavy buying.

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

With interest in NFTs peaking, scammers who aim to profit off celebrity likenesses without their consent come into play, Keren said.

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

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

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

“So, I could go find and follow this person and I could look at literally every activity they’ve ever done,” she said.

Blockchains allow NFT consumers to verify if a person is truly sending the buyer their NFT at the time of purchase. It also reveals how long someone bought the NFT for, as well as the date the transaction was completed.

But when it comes to NFTs featuring celebrities and athletes, Felicetti said he doesn’t bother buying unless he’s certain it’s from a regulated market, such as DraftKings, which is regulated by the Alcohol and Gaming Commission of Ontario.

“So, somebody just goes, ‘Oh, I’m starting this thing, it’s Patrick Mahomes,’ I wouldn’t,” she said. “I need to know where it’s from.”

Tinkering for decentralization

Jordan Neal, an employee of The Baseball Card Store, said he doubts 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, but if he wants to buy a digital art or NFT, he has to sign up with a bank account and transfer money and stuff like that,” Jordan Neal, employee at The Baseball Card Store, he said. “It’s just prohibitively expensive.”

Julian Zugazagoitia, CEO of the Nelson Atkins Museum of Art, said he’s keeping an open mind, even if he’s not quite ready to buy a piece.

He said in a sense that the digital art market is similar to other art forms that were once considered new.

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

He said that the fact that people are actively counterfeiting NFTs means that there is a reality about them that shouldn’t go unnoticed.

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

But Felicetti said regulation is something the cryptocurrency world is battling against.

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

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

“How else can you come up with an idea and make it happen?” he said. “If you needed $300,000, well that’s probably a lot, if you needed a handful of money to back up your idea, to me this is one of the best avenues to do it.”

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

“If you do that, you want to buy the real thing and not the fake,” she 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 markets, detect these NFTs and remove them,” Keren said.

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