Crypto burglary

Taiwan singer popularises NFT then falls victim of scam


Going ape: Chou announces the theft of his NFT on his Instagram page

As the price of popular NFT soars, so too has the rise in the incidence of thefts of these non-fungible tokens. In February, hackers stole hundreds of NFTs from users of OpenSea, the largest NFT trading platform, reportedly worth as much as $1.7 million. Many targeted NFTs from the Bored Ape Yacht Club – whose cartoons of ennui-stricken apes often sell for six or seven figures apiece – by tricking owners into giving up the passwords to their crypto wallets.

On April 1, Chinese pop star Jay Chou revealed to his 7.1 million followers on Instagram that his BAYC NFT had also been stolen in what appeared to be a phishing attack.

In the post, the Taiwanese singer wrote that he had received a call from a friend on the first day of April telling him that his NFT had been stolen. He brushed it off at first, thinking it was an April Fool’s Day joke. “Then I checked and realised it’s really gone,” he wrote.

According to Chou, his stolen NFT, identified as “BAYC #3738” (there are 10,000 NFT in the BAYC collection) features a cartoon ape in a stunt jacket with pink fur, angry eyes and an icy grin. Records on OpenSea show that the digital item was transferred away from Chou’s account and quickly changed hands – twice – at LooksRare, another NFT trading platform, first it was sold for 130 ETH and the last transaction was 155 ETH, which is roughly equivalent to over $500,000.

According to cybersecurity experts, once stolen, the NFT is likely gone forever.

Jiemian, a news portal, later reported that in addition to the Bored Ape NFT, hackers also took from Chou’s crypto wallet a Mutant Ape Yacht Club (MAYC) and two Doodles collectibles. They were all highly coveted NFT collections.

After news of Chou’s NFT theft went viral on Etherscan, an analytics website that allows users to view public data about NFT trades, the crypto wallet address from which Chou’s NFT was stolen was marked with a warning. It told them it had been associated with phishing and users should exercise caution when interacting with the address. OpenSea, too, has temporarily disabled transactions of the stolen image on the platform and marked Chou’s account as “compromised”.

But how was the NFT stolen in the first place? When it comes to security, Jiemian reckons that it is near impossible to hack the password to a crypto wallet.

However, in his Instagram post, Chou revealed that he’d asked a friend to “mint” a new art collection which, in layman’s term, means publishing a digital asset on the blockchain to make it purchasable. This is a highly energy-consuming work so minters usually charge what they call a “gas fee”. And that is where the virtual burglary took place, ThePaper.cn reckoned.

Indeed, records suggested that Chou’s friend might have given permission to what turned out to be a phishing site access to the pop singer’s crypto wallet and attackers went on to steal the NFTs from their owner.

“Judging from the information, it appears that the theft had nothing to do with the security of the NFTs. It’s just that, emm (sic), Jay Chou had fallen victim to an e-commerce scam,” ThePaper.cn mused.

Although China has banned cryptocurrency trading and mining, there is no regulation of NFTs even interest in NFTs has exploded in the country.

Previously Chou had capitalised on the craze for the digital asset. In January, the business-savvy pop icon launched the Phanta Bears, a collection of 10,000 algorithmically-generated digital avatars inspired by the pop star’s fashion brand. The digital collectibles sold out less than 40 minutes after their release on OpenSea. There was speculation that Chou planned to launch other NFT collections later this year.

The problem is, despite the rising popularity of the digital assets, there is still little oversight in the market. Some platforms have tried to clamp down on the sale of stolen NFTs to make it hard to buy and sell illicit ones even though the value of the NFT continues to go up. Problematically the NFT realm has also attracted a lot of speculators who have little knowledge about how blockchain works.

“With the growing excitement over NFTs and as more and more buyers piled into the market, many of which are novices with little to no experience, all they want is to make a fortune and they have little concern about the security,” commented ThePaper.cn.

TMT Post also warned that the burgeoning digital art market is starting to lose its original meaning. “NFT should be about an artist’s work, whether it’s a single work or a mass-produced series, they should be an artistic expression and creativity. However, the so-called NFTs on the market have raised prices through gimmicks. They are now no different from other financial products,” lamented the news site.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.