A panel from 'Everydays', the massive collage sold as a crypto asset by Christie's for £49m
Credit: Mike Winkelmann (aka Beeple)/Christie's
David Drayton had been so excited to own some real crypto-art. Intrigued by the growing buzz, the Hamburg-based designer paid about 50 euros (£43) in cryptocurrency for a digital certificate of ownership for a lovingly computer-rendered golden skull.
A few weeks later, however, he learned that the artwork had been stolen from its creator’s web page and turned into a crypto-asset without their knowledge or permission. "Holy sh—!" Drayton said. "I’ve been ripped off!"
He wasn’t alone. Tens of millions of dollars are being poured into artworks backed by unique units of cryptocurrency known as non-fungible tokens (NFTs). Last week Christie’s closed its first ever NFT sale for $69m (£49m).
Advocates bill NFTs as the ultimate stamp of authenticity, using blockchain technology to irrevocably verify the ownership of digital assets and giving small-time artists a transformative new source of income.
Yet for many artists the NFT market has done just the opposite, creating novel incentives for fraudsters to profit from their work. Comic illustrators, 3D renderers and pixel painters have all discovered their art on major exchanges, sometimes selling for hundreds of pounds.
What is an NFT?
In one example, famed New York City hip-hop group the Wu-Tang Clan promoted NFT art that may have violated another artist’s copyright – only to remove all traces of their involvement once word began to spread.
Meanwhile, the speculative fervour has created a honeypot for scammers using fake cryptocurrency wallets to steal thousands of pounds, as well as an alleged "pump and dump" scheme that persuaded artists to hand over money to boost the value of a currency.
‘Art theft has never been this rampant’
In theory, NFTs are perfect for preventing art fraud. Because they are held on a blockchain – essentially a decentralised transaction log maintained by thousands of computers across the world using unbreakable encryption – they cannot simply be edited or doctored.
In 2018, however, British coder Terence Eden highlighted a loophole by registering himself with Verisart, a blockchain start-up, as the creator of the Mona Lisa. Though Verisart took it in good humour, the stunt made clear that even blockchains still depend on trusted authorities such as art galleries or auction houses to verify that an NFT is attached to the genuine article.
Surprising new evidence of the Mona Lisa's origins
Credit: Leonardo da Vinci/Terence Eden/Verisart
Posts about art theft began appearing last September on the online forum of Rarible, an online NFT marketplace estimated to be the most-visited, and by December there was talk of an "influx". Now, with the flood of new attention and money pouring into NFTs, the problem appears to have become a plague.
"Art theft has never been this aggressive and rampant ever before," says artist Chris Moschler, who said he had blocked more than 30 Twitter accounts trying to "mint" NFTs based on his tweets, often using automated tools. "I cannot understand how this is still being called a revolutionary movement in the art world."
Although very few of these mass coinages appear to have actually made money, they spread fear through the community, exacerbated by trolls who delighted in minting any tweet they could find. Many artists locked down their social media profiles, swapping lists of accounts to block and tips on how to prevent counterfeiting.
Even Star Trek actor William Shatner, who recently launched his own NFT trading cards, was affected, saying: "Authors, actors, models, photographers, etc should be concerned."
Corbin Rainbolt, a paleo-artist in Indiana, US, was one of those who deleted his paintings from Twitter and reluctantly re-posted them with watermarks. "Many small artists are struggling right now, and if someone mints a piece of art that they worked hard on and manages to make money off of it, that is a huge emotional blow," he said.
Hello all,
This afternoon, someone tagged a NFT account on my Spinosaurus painting.
As such, I have deleted all my art tweets. I am reposting them here with watermarks.
It's a bit of a gamble for me so retweets are very much appreciated and help me get my art back out there pic.twitter.com/mFABVSozmX
— Corbin Rainbolt (@CorbinRainbolt) March 9, 2021
"If someone were to make even a few thousand dollars off of one of my paintings without my consent, it would be absolutely devastating. And this isn’t hypothetical, it’s happening to so many artists right now."
Scammers have also been buying adverts on Google searches for Metamask, a cryptocurrency wallet recommended by leading NFT exchanges, and Zapper, a crypto asset dashboard. The adverts lead to realistic-looking fake websites designed to trick users into giving their passwords.
This was how Jeremy Wolff instantly lost the $5,800 (£4,166) proceeds of his recent foray into NFTs. Since cryptocurrency transactions are not controlled by any one bank or payment processor, they cannot be reversed.
"The entire experience has made me a bit more wary and paranoid," Wolff told the Telegraph, although he still believes in NFTs and intends to relaunch his works. "What happened to me was unfortunate, and I think with a new space there will be a lot of naive people like myself that will be going too fast and be tricked like I was."
Please retweet. This story needs to be heard. Im just so sad. Please spread the word
I just had my @MetaMask wallet completely wiped out while starting my NFT career#scam #eth #metamask #bitcoin #btc #Ethereum #cryptocurrency #rarible #nft #nftartist #nfts #NFTCommunity pic.twitter.com/zoQ8609qGR
— Jeremy (@jwolffstudios) March 3, 2021
The strange case of the Wu-Tang NFTs
The Wu-Tang Clan’s announcement that it was selling NFTs earlier this month sparked immediate interest from collectors. A Rarible page named "Wu-Tang" surged to the top of the charts on its first day, netting at least 18.15 Ether (£25,000), the currency of the popular Ethereum blockchain.
Among the first buyers was Ovsky, an NFT artist and Wu-Tang fan who describes himself as a 21-year-old student in Philadelphia. Spooked by the rapidly climbing bids, and reassured by the Wu-Tang account’s yellow "verified" badge, he paid 0.5 Ether (£673) for a depiction of Wu-Tang’s Ol’ Dirty Bastard as a Shaolin monk leaping through the air.
It quickly emerged that the work was intensely similar to an eight-year-old digital painting by a New York City tattoo artist, who had no knowledge of the project. "I was really surprised and upset to find this all out," said Ovsky, especially with "such a respected and big group".
This was not the first time the Clan had been accused of copyright infringement. In 2016, the group was sued over the one-of-a-kind album that it sold to pharmaceutical executive and now convicted fraudster Martin Shkreli. The artist later dropped the suit, saying only that the issue had been "resolved".
As word spread, all trace of the Clan’s branding was removed from the Rarible page, and official social media posts promoting the sale disappeared. The NFTs were now listed as the work of "The Shop", which remained verified but linked to the Instagram page of Dario, an artist who worked with the Clan on a Sotheby’s sale last year.
A screenshot of a post on Dario's Instagram page
Credit: Kevin Alexander/Ovsky/Dario
A screenshot seen by the Telegraph appears to confirm Dario’s authorship, showing the same artwork on his Instagram page. "I created this animated NFT for the Wu Tang Clan from an image I found online," says the caption.
Dario, the Clan and Rarible did not respond to questions, and the Clan’s agent declined to comment. But after the Telegraph’s messages on Friday, The Shop went dark, removing all links to Dario and "burning" the NFTs still in its possession.
It is unclear who now has the £21,000. Public transaction records assembled by Isyourguy, an Australian musician and sound artist, show Ether and NFTs being transferred to another Rarible page called "The Collector Shop". That page’s owner also did not respond to questions.
Crypto-art buyers have few protections
The response from NFT marketplaces has been slow and sporadic. One user on Rarible’s own forums compiled a list of 32 artworks that appeared to be stolen, all sold by a single user for a total of about £3,000. Six months later, that user is still active, and the works still listed.
David Drayton says that Rarible never responded to his messages, and that some of the NFTs had vanished from his wallet without notification. "All I know is that I won’t ever buy nor sell anything on Rarible ever again," he said.
While neither OpenSea and Rarible responded to requests for comment, their terms of service forbid users from abusing others’ copyright. Both also have email addresses for copyright takedown requests, and a system for users to report NFT listings.
As for verification, Rarible asks users to send links to at least two active social media profiles where they promote their art, as well as evidence from "behind the screen" of a minted item, such as work in progress.
However, users also need to show "active dedication to the marketplace". OpenSea’s system is even more limited, including only NFT collections "with large volume and significant social media traction likely to attract fakes".
Sales of crypto-art have surged
Mostly, buyers have been left to fend for themselves. "Anyone can create an NFT at any time, including fake versions of existing items and items that are at risk of being removed due to copyright issues," says OpenSea’s help centre "Please do your research before making a purchase." A recent blog post adds that this was "part of the fun".
Artists are in a similar boat. Aaron Reynolds, creator of the Effin’ Birds Twitter account, whose foul-mouthed fowl have inspired spin-off merchandise and books, describes a long, tortuous process to get marketplaces to de-list unauthorised NFTs minted from his tweets.
"The part that made me frustrated was this idea that it’s on me to stop them from selling my work without my authorisation," he said. "Who makes a platform to sell the rights to intellectual property without verifying ownership? Just because there’s technology involved in the theft, that doesn’t make it the victim’s role to police the platform."
‘No one knows how their art might be stolen next’
NFT advocates argue that forgeries will ultimately lose their value, especially if the real artists get verified and begin selling their own. Others say the mass-minted NFTs that have so alarmed artists are only worthless derivative assets, merely linking to artists’ content rather than reproducing it.
Tweet-based tokens can be very valuable: Twitter chief executive Jack Dorsey is currently auctioning an NFT for his first ever tweet from 2006, with the highest bid standing at $2.5m. But that same tweet was already minted last June by @TokenizedTweets, an automated minting service used by many of the art trolls, suggesting that unauthorised tokens are unlikely to prosper.
It is unclear whether any of NFTs automatically minted from artists’ tweets have actually been sold. Approached for comment, the developers of @TokenizedTweets claimed that none of the tokens had ever changed hands for money. They said they had de-listed all their NFTs until safeguards are in place, and had modified the service to refuse any tweets containing images or videos.
The backlash forced another service called MarbleCards, which turns web URLs into collectable trading cards, to block images from showing up as thumbnails on its cards.
Just a heads up, I did not create a account on Rarible, someone is impersonating me there. Do not buy anything from them.
— Kenze Wee (@Seppuku_Doge) September 10, 2020
Yet Reynolds believes that creating speculative assets to profit from his output still violates his copyright, just as it would to screenshot his tweets and sell them on mugs or posters.
Worse, he has already sold the exclusive rights to derivative works to Penguin Random House, meaning that NFTs can put him in legal trouble even if they don’t sell. Merely listing them for auction could create the appearance that he has "double-sold" the rights.
Corbin Rainbolt was likewise little reassured, saying the lack of protection is forcing artists to choose between limiting their audience or tolerating theft. His disgust with cryptocurrency’s enormous carbon footprint means he cannot simply mint his own NFTs.
"I don’t know much about how crypto-art works, and neither do most artists, but the lack of accountability and transparency surrounding NFTs has got artists feeling really nervous," he said.
"Things are moving so fast that no one knows how their art might be minted, so when NFT-related things that seem threatening start to pop up, artists panic… I don’t know what the next tactic for art theft will be, so I have to view any suspicious activity as a threat."
Other victims, including Ovsky and Drayton, remain committed to the scene despite their experiences. For Vincent Viriot, a Paris-based creator of animated computer art, having three of his works ripped off was actually what led him to start selling his own NFTs.
"NFT reminds me of [art sharing] like five years ago: new and with lots of freedom," he said. "It re-motivates lots of designers – we can sell things that we were doing for free for years.
"Of course there’s fraud… and I don’t know if there’s more of my pieces sold by another person. [But] the community is very supportive and I think they’ll notice and prevent it."
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