NFT's, The human element which presents a risk worth serious assessment

I-OnAsia has been operating in the tech space for more than two decades supporting entrepreneurs and companies against daunting challenges ranging from due diligence investigations to physical security assessments, bug sweeps, and everything in between. We, admittedly, may not have always understood the underlying tech of our entrepreneurial clients, but we have certainly understood, recognized and successfully eliminated or mitigated the risks that have orbited them.

We are now assisting clients with their newest and most valued assets in the form of Non-Fungible Tokens (“NFTs”).

Although NFTs first hit the market in 2014, we only recently experienced a boom in 2021 with limited edition digitized art work selling for as much as USD69 million. These rapidly increasing sums are attracting interest among wealthy celebrities and other public figures.

So, with this explosion of interest and significant value being placed on these graphics, which are bought and sold using crypto currencies, what are the risks to high-net-worth individuals ("HNIs”), taking advantage of this newfound investment opportunity?

First and foremost, the greatest risk is, sadly, the people working for or tagging along with the HNWs. They see the vast sums being splashed around; they have intimate knowledge of the HNWs’ personal and business dealings; and they are entrusted with handling financial transactions on behalf of their employers.

These human-factor risks are often described as potential “insider threats”, which may include current intentional, unintentional, collusive or third-party threats caused by employees, former employees, moles, family members, etc.. Each insider threat can be elusive as HNWs are reluctant to admit or accept such conduct is being perpetrated by a trusted person. Violence, espionage, sabotage and old-fashion theft are all unfortunate and very real risks.

Carrying out thorough due diligence prior to any professional appointment/hire as well as engaging in ongoing surveillance is critical to ensuring a person fits into and is worthy of remaining in the circle of trust. This should not be a tick-the-box exercise.

I-OnAsia’s more than two decades of assisting clients such thorough vetting exercises is unparalleled.

Second and of equal importance is the cyber risks associated with the possession of valuable NFTs. After all, crypto-currency fraud in 2021 exceeded USD14 billion, which is more than twice the amount in 2020. It is critical to safeguard NFTs both in terms of how and where they are physically held as well as using reliable marketplaces and vendors to buy/sell the same.

I-OnAsia’s work with fraud and digital forensics capabilities have been proven since 2001 to be effective for our HNW, tech and entrepreneurial clients.

Fraud is not the only issue, as HNWs and their trusted persons are often carrying on their persons smart phones and other such devices which give them direct access to these NFT's and crypto-currencies, which in turn puts them at risk of physical harm, including but not limited to, serious assaults, violent robberies, kidnappings and extortions.

I-OnAsia’s threat intelligence services have effectively safeguarded our HNW clients for decades.

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