Getting whitelisted is all the rage in the NFT world right now and, naturally, it’s given rise to newer, sneakier scams. How can you spot them?

If you’re an NFT collector — or even just a casual observer of this crazy, explosive trend — you might’ve noticed a new thing in 2022 called “whitelisting.”

Whitelisting is a way for NFT project creators to reward their most loyal followers with early access to new NFTs. As you’d expect, “getting whitelisted” on certain projects can be extremely profitable — and therefore competitive.

The frenzy surrounding whitelists has also given rise to newer, sneakier scams. Heck, sometimes the whitelist itself is the scam.

So let’s start from the beginning:

  • What is a whitelist?
  • Why do NFT project creators make them?
  • How can you tell when a whitelist is a scam?

Let’s dive into the wild world of whitelisting.

What Are NFT Whitelists?

A whitelist is an NFT project’s “VIP list.”

It comprises the project’s most loyal, dedicated, and engaged followers, who are often hand-selected by the NFT artist themself.

A gif of actress Meryl Streep saying thank you at an awards show, then playfull collapsing to the floor in a bow.

MRW I get whitelisted by an NFT creator | Source: Giphy.com

 

In addition to bragging rights, the No. 1 perk of being on the whitelist is that you get first dibs on new NFTs. Artists offer new NFT drops to their whitelisted community members first, often for free or at a steep discount.

Whitelists are also transparent. As you can see from the Funny Dwarf discord, the “WL” is one of the first things you see:

Source: Funny Dwarf | Screengrab by Chris Butsch

 

Now, it might surprise you to hear that some NFT creators don’t even offer their whitelist a discount. If a project is popular enough, the creator knows that being first in line is incentive enough.

That’s because the chance to buy an exclusive NFT at “MSRP” — and then immediately flip it on the secondary market — can be extremely profitable.

Why Is Getting Whitelisted Such a Big Deal?

Generally speaking, there are two types of people trying to get whitelisted:

  • Folks who genuinely believe in the project.
  • Folks who are trying to get an exclusive NFT early so they can flip it for profit.

The latter group is swelling in number, ever since a report by Chainalysis found that “users who make the whitelist and later sell their newly minted NFT gain a profit 75.7% of the time.”

By contrast, non-whitelisted users only profited from NFT sales 20.8% of the time.

The “easy profits” from getting whitelisted is how this happened:

Source: YouTube | Screengrab by Chris Butsch

 

Anyways, I’m not here to say that scalping NFTs is right or wrong. I’m just here to inform and to make sure you don’t fall prey to a scam.

So to help fine-tune your NFT scam radar, let’s dive a little further into the “why.” The better you understand the fundamentals of whitelists, the faster you’ll be able to tell when something feels “off.”

Why Do NFT Creators Use Whitelists?

Whitelists don’t just build hype — they actually have a few technical functions, as well. In total, there are the four main reasons whitelists exist:

1. Reward Early Supporters

As mentioned, one of the main reasons NFT whitelists exist is to identify — and reward — a project’s biggest fans. As a creator, you can lean on your whitelist for input, support, and to help spread the word.

2. Generate Free Marketing

It’s not uncommon for NFT projects to lay out some basic social media requirements to earn a spot on their whitelist. They might ask you to follow their accounts, post/tweet about the project, etc. — pretty innocuous stuff.

But sometimes the requests can get a little intense – like asking you to post something every single day leading up to a mint. But more on that in a bit.

3. Combat Spam

On a more technical side, whitelists help to combat spam by “pre-screening” buyers before a mint. Before whitelists, it was much easier for bots — and bad guys with multiple accounts — to scoop up every NFT for scalping, well before genuine supporters of a project even had a chance.

That’s why one of the requirements to make any whitelist is to verify your personal information and your wallet address.

On a side note, it’s nice to see how the NFT community has come up with a blockchain-based solution to scalping — perhaps something Best Buy could adopt when the PlayStation 6 comes out…

4. Prevent “Gas Wars”

Finally, whitelists help to prevent “gas wars” where everyone tries to mint an NFT at the same time, causing a traffic jam on the Ethereum network and needlessly raising transaction fees.

Instead, the whitelist creates an orderly line of people waiting to pick up their reservation during predetermined time slots, often referred to as “waves.” A whitelist might help to organize 10 waves of 100 NFTs — each spanning several hours — to keep network traffic low and fees reasonable.

That covers the “why” behind whitelists so you’ll know what to look for in a legit one.

Are NFT Whitelists Legit? Or a Scam?

NFT whitelists aren’t inherently scams. In fact, most are legit — and super useful.

Whitelists help to galvanize the community, support the creator, and protect everyone involved from fraud and bots.

That being said, the introduction of whitelists has also given rise to a whole new type of scam. And considering scammers stole $7.8 billion worth of crypto and NFTs in 2021, more are sure to follow.

Whitelist scams typically follow the same pattern: you receive a direct message on a project’s discord saying you’ve been whitelisted, and as a next step, you have to follow a link to enter additional information.

To illustrate, here’s the exact message sent out by scammers on the BAPE NFT discord, which scammed 20 users out of $275 to $550 each:

 

As you can see, the message may look kinda legit. Heck, it may even come directly from a moderator or the project creator themselves, if they’re in on the scam.

But here’s how you can tell it’s BS.

4 Signs a Whitelist Is a Scam

If you get a surprise DM saying you’ve been whitelisted, assume it’s a scam until you can prove otherwise.

Start by looking for these four red flags.

Oh, and if you find one or two of these red flags in the project’s very own “How to Get Whitelisted” channel, the project itself might be one big scam!

1. You Can Actually Buy a Spot on the Whitelist

If a creator, discord moderator, or just some random user claims that you can buy a spot on the whitelist with a little bribe of Ethereum, it’s total BS. Legit NFT creators don’t squeeze or manipulate their community like this.

A gif of a woman gesturing with her hands and saying, "It's a total red flag"

Source: Giphy.com

2. You’re Asked to Share Compromising Personal Info

A scammer might say that in order to verify that you’re human (aka not a bot), you’ll have to enter detailed personal information such as your full name, phone number, address, and even your SSN. Don’t do it. It’s most likely just a phishing scam, but people fall for it because it sounds logical.

3. You’re Asked to Share Your Private Key

Your private key is like your bank account username and passcode rolled into one. Never, ever, ever share it. Your public key is all you ever need to share to receive crypto.

4. You’ve Been “Whitelisted” by an Unverified Source

Perhaps the most obvious sign that you’re getting scammed is if the DM you received didn’t come from a moderator or the project creator.

In all of these cases, what should you do if you think you’ve spotted bad guys in the act?

I Think I’ve Spotted a Whitelist Scam. Now What?

Let’s say you’re on a project discord and you think you’ve spotted a scammer.

Besides ignoring it, what should you do to help out the community?

If the scammy message didn’t come from the project’s creators, report the scammer to them ASAP so they can investigate, ban the scammer, and warn the community accordingly.

If the scammy message did come from the project’s creator or a moderator, the NFT project itself might be one big scam. Specifically, it could be a “rug pull” in the making, whereby scammers trick people into investing in a crypto or NFT project, then disappear with their money without delivering the goods.

  • In this case, try Googling “[project name] scam” to see if it’s already been revealed as a scam.
  • You could also see what people are saying about the project on various NFT subreddits (r/NFT, r/NFTsMarketplace), and consider posting a warning there to others.
  • Finally, you can file a report with the FTC. Depending on the nature and scope of the scam, the FTC may pass it to another agency for enforcement.

But rest assured, scammers don’t always get away with it. Just ask Ethan Nguyen and Andre Llacuna, who are each facing up to 20 years for the Frosties NFT rug pull:

Source: justice.gov

The Bottom Line

If a project you’re following has a whitelist, don’t worry — that doesn’t mean it’s a scam. In fact, whitelists help to improve a project’s chances of success by boosting hype and combating fraud.

But the whitelisting concept has given rise to new scams, so it pays to be vigilant.

Featured image: mundissima/Shutterstock.com

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About the author

Total Articles: 166
Chris helps people under 30 prosper - both financially and emotionally. In addition to publishing personal finance advice, Chris speaks on the topics of positive psychology and leadership. For speaking inquiries, check out his CAMPUSPEAK page, connect with him on Instagram, or watch his TEDx talk.