The Great Whitelist Scam

All too often, investors are falling victim to crypto scams causing many to lose interest in the space. Tricks and bad intentions such as hacking or giving out your private keys accidentally can happen, and there is a more common scam called a Whitelist Scam that average consumers need to be aware of. 

Flipping NFTs for profit

To understand how the Whitelist scam begins, we take a closer look at one of the most common forms of profit taking that exist in NFTs called flipping. This is a method where a buyer will purchase an NFT and relist it for a higher price which another person will buy. 

Project artwork reveal

When a project is made public for sale, in many cases the artwork is not entirely known by the community yet. It is artwork covered by a wrapper which is the same image on every token in the entire collection that typically shows a graphic or animation. 

During this time, trading is extremely active as demand for the NFTs can exceed the supply of whitelist spots.

Now, to clarify, a whitelist is the initial group of buyers that a project approves to have the first mint of their NFTs. It is a way to organize early buyers and identify who was first to a project. 

By being the earliest members of a collection, you are given the ability to mint an NFT at its lowest price thus being able to entertain a variety of offered prices to receive a large profit. Being on the whitelist for a major project such as Azuki is comparable to finding gold. 

Generally, the time between minting an NFT and revealing its artwork is when it is best to flip an NFT. This is because, when wrapped, all the NFTs have the same value because the rarity of a wrapped token is not known. 

The community at this time is highly excited, driven by profit dreams, and hoping the tokens they are holding will become the most valuable. 

Excitement reaches its peak just before the reveal date and after the artwork is revealed the floor price begins to drop in most cases. For collections like Everai and Moonbirds, the floor price does rise, and those are the rare occurrences that everyone hopes for. 

The profits driven during the pre-reveal phase in reality tend to be the only reliable way to make gains and why they are so coveted.

Obtaining a spot on the whitelist

In the world of NFTs, and crypto in general, the common belief is that the earlier the better. Chances of acquiring a whitelist spot on a project get harder as the presale mint gets closer. Many users flock to sites such as UpcomingNFT or NFTCalander to get the earliest looks at upcoming projects. 

These collections are generally low quality and poorly constructed, yet it can still be one of the best places to begin searching for the next big NFT outside of discord communities such as ChampsOnly or exclusive membership areas like PROOF. 

During this research, investors begin looking more closely at the team behind the NFT collection and the community supporting it. The community behind a project drives the buying activity which is fueled by utilities and expected growth. 

Twitter and Discord are the two prominent areas to research when looking at new NFT projects. This is also where the Whitelist scam begins.

The whitelist scam

When joining a discord server, there is a high probability that you will be sent a DM from someone pretending to be a part of the team creating the NFT project. 

The scammer will copy the team’s information and links to appear legitimate and send you a link with convincing text saying that you have just earned a spot on their whitelist. This is the scam.  

Every team makes it a priority to express that they will never DM you once on Discord. This is done to prevent any confusion about the messages in your private inbox. It is extremely important to be aware of this messaging trick because the ruse only gets more convincing. 

Upon clicking on a whitelist link sent from an unknown DM source, you will be taken to a website that generally ends in .com unlike the more common.io and .xyz domains. 

When looking at this fake minting site, you will notice that the mint price is relatively cheap, usually below .1 Eth. There is a counter that mimics the number of NFTs that have already been minted and counts upwards to induce buying pressure on the user by simulating the belief that available NFTs to mint are becoming scarce.

FOMO is used to pressure the buyer into purchasing the fake NFT. The buyer then connects their wallet and signs to purchase the mint, but will actually give away their funds to the scammer who is unable to be traced. 

NFT teams will never send you a DM

This is an extremely dangerous scam using predatory tactics that feed off the demand from buyers to receive whitelist spots because of their inherent value to a project's floor price.

It is necessary to be extremely vigilant and to never reply to any DMs that are sent your way on Discord. It is even better to report these scams so that others can avoid it too.

Many NFT projects have a channel on their discord server that is dedicated to reporting scams and contributing to this conversation can strengthen the community behind a project which will increase the value of an NFT. 

Safety and security are a top priority in cryptocurrency and spreading awareness of the different scams and schemes used by fake accounts can keep our community safe.