What Is Metaverse Fraud? Best Examples Of Metaverse Fraud Work- 2022

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However, what is metaverse fraud? This is a whole new notion; cryptocurrencies and blockchains have been around long enough that we are familiar with many of the concerns that surround them.

The metaverse may have intentions to grow beyond blockchain, but at its foundation appears to be this technology, which, regrettably, criminals have discovered to be quite effective for laundering money, stealing identities, and conducting scams.

Due to a lack of KYC checks on some platforms, paired with insufficient regulatory controls, fraudsters can try new tactics and, to some degree, enjoy risk-free attempts to defraud both firms and customers.

Blockchain-based transaction crime reached a record high of $7.8 billion in 2021, and with the continual danger of hacking, there is surely some element of risk to the multiple metaverses.

Examples Of What Is Metaverse Fraud?

Examples Of Metaverse us Fraud Work

Any firm that provides crypto-based services, as well as people who choose to enter the metaverse and the larger crypto-adjacent economy, face a variety of hazards.

Any firm that provides crypto-based services, as well as people who choose to enter the metaverse and the larger crypto-adjacent economy, face a variety of hazards.

Account Takeover (ATO) Assaults Are Common.

Traditional means, like phishing attempts, will be used by fraudsters to obtain access to accounts and rinse them of any cash or NFTs stored by the account.


Fraudsters will utilize traditional methods, like as phishing efforts, to get access to accounts and drain them of any cash or NFTs held in them.

Transactions That Are Irreversible

Crypto Because of the blockchain’s open-record information, cryptocurrency is famed for its openness. However, once a transaction is completed, it is extremely hard to undo. This contradicts several customer expectations, particularly when contrasted to offline purchases.

Affiliate And Influencer Fraud

In one well-known case of crypto influencer fraud, celebrities like Elon Musk and Jeff Bezos had their Twitter accounts hijacked as part of a bogus giveaway. Similarly, future metaverse promotions may look like this.

Fake Reviews

Fake reviews may severely harm a brand’s reputation at a time when these new platforms must stay transparent to their communities in order to prosper, maintain their token price constant, and retain committed users. A targeted poor review assault, for example, using bots, might easily frighten buyers away and cause a decline in token price.

Scam Projects

Because NFTs and crypto are unregulated, there is an opportunity for fraudulent projects to surface on significant markets, as well as difficulties with copyright and intellectual property. Vice, for example, has already documented certain cases from late 2021, such as an NFT project developer who vanished with $2.7 million.

Data Breaches

Data breaches, on the other hand, are a worldwide issue. As technology becomes more widely available, metaverse platforms must secure the security of their customers’ data or risk losing consumer trust.

Ecommerce Related Fraud

Handling online items, even in digital form, opens the door to common eCommerce scenarios such as chargebacks, friendly fraud, refunds, and other settlement conflicts.

Regulation Is Lacking

The current absence of compliance and regulating legislation allows for potentially harmful scenarios for both users and businesses.

Market Manipulation And Volatility

To make money, users frequently trade tokens without participating with the platform itself – and hazards like as aggressive market manipulation, rug pulls, and honeypots should be avoided by all parties.

Virtual World Fraud

To make money, users frequently trade tokens without participating with the platform itself – and hazards like as aggressive market manipulation, rug pulls, and honeypots should be avoided by all parties involved.

Rug Pulls

The most notable probably being a digital token inspired by the Netflix series Squid Game and billed as a play-to-earn metaverse game, new technology introduces opportunistic bad actors. $SQUID turned out to be a total hoax, losing all of its value very immediately, with the creators fleeing with all cash.

Issues With Decentralization

Because of the decentralized nature of crypto and NFTs, it might be difficult to follow phishing or virus assaults, since fraudsters can use tools like tumblers to eliminate linkages between themselves and the source.

Issues With Decentralization

Furthermore, OSINT researcher and artist Kirby Plessas say in a podcast with ACFE that more calculating criminals may leverage the buzz to launder money through both crypto and NFTs.

“Fraudsters [can] either create their own NFT companies and then possibly load up with Ethereum, get people to possibly preload into the marketplace that they create and then close it down as an exit scam, for example, or pretend to be the guide to help somebody create an NFT, for example, to create some… [before] hijacking and taking over the NFT account.”

The metaverse offers enormous opportunities for marketers to communicate with their customers, but platforms that host such worlds must guarantee that their defenses are easily adaptive to the new types of fraud, identity theft, and laundering tactics that will undoubtedly arise.

Furthermore, from a professional standpoint, users will most likely desire various accounts to separate their personas from their future professional identities.

In an interview with VentureBeat, James Gatto, the leading blockchain lawyer at the legal firm Sheppard Mullin, explains:

“Part of this is figuring out how to link those together if they want them separate, in addition to all the conventional data privacy challenges when someone has several identities.”

What Tools Can Stop Metaverse Fraud?

It will not be simple; nothing is ever easy. Fraud protection is a never-ending struggle, and fraudsters will undoubtedly see platforms as ripe with fresh possibilities to uncover weaknesses, experiment with new ways, and ultimately swindle organizations and individuals.

Certain things may be done by platforms prior to launch to fortify defenses and keep fraudsters out before they have a chance to explore the new frontier. Here are a few examples.

Minimize Silos

Minimize silos

Fraudsters are calculating crooks who analyze sectors by testing approaches with different firms to see what could work and often share knowledge with others.

Fraudsters are calculating crooks who analyze sectors by testing approaches with different firms to see what could work and often share knowledge with others.

Information is frequently trapped in silos, which is a headache for risk/fraud managers who want a comprehensive picture of corporate data to discover links between dangerous consumers.

A lack of communication and openness across teams can result in significant information gaps, which can have an impact on revenue, security, and decision-making efficiency.

We would propose not just trying various sorts of technologies that may assist generate a complete 360-degree perspective of the business, but also utilizing machine learning, which can help with data categorization and automate easy decisions.

Having models and rulesets for each stage of a user’s journey (account creation, login, transactions, and so on) with an easy-to-use GUI may drastically decrease the danger of missing information.

Multi-Layered Defenses

Multi-layered defenses

Machine learning is just one component of a complex risk management product stack that will assist metaverse platforms in safeguarding their company and users.

Other solutions that complement the machine learning approach should be added on top of this. Frequently, suppliers will provide an overall risk score that may be used to automatically approve or reject someone while they are onboarding, logging in, or transacting.

For some platforms, BlackBox AI will be the preferred method since it handles the bulk of choices without the need for human intervention. However, for early-stage launches, Whitebox AI can be more beneficial in reducing customer insult.

This is due to the fact that Whitebox ML gives full transparency into why a decision or score was achieved, allowing humans viewing the findings to pick and select the aspects of the analysis that are most relevant to the circumstance at hand.

Browser And Device Fingerprinting

Browser And Device Fingerprinting

In summary, knowing how to identify someone’s device settings can aid in the detection of emulators, virtual computers, and bots.

Unseen devices should be another sign of possible risk, however, it is worth noting that many metaverses will be available on various devices – which might lead to consumer offense if you depend only on them.

Knowing the customer’s devices, location, and configuration may be a fairly easy method to discover misalignments and possible hazards as additional technology are utilized, including VR headsets, PCs, and mobile phones.

Digital footprint analysis 

Seeing a user’s digital footprint is very helpful when they sign up. Companies may check the veracity of accounts with simply an email or phone number because most honest individuals will have some type of online imprint, whether it’s social network presence, web platform activity, or instant message accounts.

IP scanning 

Knowing an honest user’s IP address and then noticing a huge disparity should instantly trigger a red alert.


If there are incompatibilities, certain services can mandate two-factor authentication requirements, which adds friction but also protects users better in certain scenarios.


There is a lot of buzz, money, and prospects for metaverse/web 3.0 firms to become dominating players, earn a lot of money, and totally revolutionize the way we socialize.

However, in their early stages, these platforms must prioritize risk management techniques above new functionality. Otherwise, the public’s trust — and consequently interest – will dwindle swiftly.

Using the experiences of businesses that have expanded tremendously in recent years, such as esports, gaming, and cryptocurrency should assist these organizations in understanding the common dangers associated with emerging technologies that accept alternative payment methods.


  • BBC: Bitcoin: Fake Elon Musk giveaway scam ‘cost man £400,000’
  • Chainalysis: The NFT Market Report
  • ACFE Insights: Fraud Talk: An Introduction to Non-Fungible Tokens (NFTs) and Fraud
  • VentureBeat: How the metaverse will impact governance, privacy, fraud, identity, and more
  • Gartner: Gartner Predicts 25% of People Will Spend At Least One Hour Per Day in the Metaverse by 2026
  • Chainalysis: The NFT Market Report 2021
  • Forbes: Uncertainty In The Valuation Of Non-Fungible Tokens
  • BankInfo Security: Virtual Money Laundering and Fraud
  • Vice: Investors Spent Millions on ‘Evolved Apes’ NFTs. Then They Got Scammed.

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