AI-Driven Cryptocurrency Scams on the Rise
The surge in Artificial Intelligence (AI)-powered scams within the cryptocurrency landscape has touched almost 200% in a year. This was revealed in a recent blog posted by the popular blockchain analytics enterprise, Chainalysis. Victims reportedly transferred 60% of the funds sent to cryptocurrency wallets into those associated with AI-fueled scams. The proportion of these transfers have surged from a mere 20% in 2024.
The Modus-Operandi
AI-powered crypto scams refer to deceptive practices that utilize AI in diverse tactics to hoodwink unsuspecting victims. These tactics range from deepfakes, manipulative robots, fake trading platforms, voice cloning techniques to complete impersonation. According to the Chainalysis study, scams at the crossroads of AI and cryptocurrency are often more sophisticated, challenging to detect, faster to execute, and alarmingly convincing.
Cybercriminals are exploiting AI tools, a trend that has skyrocketed across different sectors of the economy worldwide. The scams developed by these criminals effectively utilize the rapidness, capacity, and complexity of the latest machine learning (ML) models. Chainalysis states that this allows for increased scale and faster execution.
Credentials and Creativity
Among the most imaginative scams facilitated by AI at scale are fraudulent investment bots that entrap users into transferring funds. Reportedly, entire fake trading platforms have been built around deceptive AI algorithms. These platforms promise high returns on deposited crypto while simultaneously draining the deposited assets using AI-generated images or credentials to bypass two-factor identification.
Chatbot Scandals and Social Engineering
Additional scams include chatbot scams and customer support impostors, made simple by AI support requiring minimal human involvement. Some operations use AI-assisted “pig butchering” scams – a form of social engineering tactic that builds trust over weeks or months before defrauding victims.
The report also speaks of voice cloning and real-time scam call operations. These replicate the voice of someone familiar to the victim to obtain access to a crypto wallet or exchange account. Ironically, even scam artists and hackers have been falling prey to these scams.
Increase in theft scale and speed
Observing such alarming advancements in the scam landscape, Chainalysis points out that fraudsters now operate at unprecedented speed and large scales.
In April, another blockchain security firm named CertiK reported that more than $364 million was lost due to cryptocurrency exploits, hacks, and scams in that one month alone. The main source of losses in April was a single enormous phishing attack, identified first by on-chain investigator ZachXBT. The continued rise in AI-powered scams has thus highlighted the urgent need for increased security measures in the cryptocurrency industry.
The Bottom Line
Artificial Intelligence, a miracle of digital innovation, is being exploited for illegal activities. Cryptocurrency, another digital marvel, is emerging as a lucrative sector for criminals due to its decentralization and lack of regulated security measures. The surge in AI-powered scams is a harsh wake-up call for the industry.
