Blockchain analytics firm Elliptic recently released a comprehensive report titled “The State of AI-Enabled Crypto Crime: Emerging Typologies and Trends to Look Out For.” This report sheds light on the alarming rise of artificial intelligence (AI) to facilitate various crypto-crimes.
While AI has been a game changer for many industries, its abuse in crypto is becoming a major concern.
How AI is Transforming Cryptocrime: Elliptical Insights
Elliptic’s report identifies five core typologies of the use of AI in crypto-crimes. The first and perhaps most notorious is the use of AI-generated deepfakes. Often scammers use fake images or videos of public figures to create convincing scams.
For example, fraudsters have used impersonations of figures such as Elon Musk and former Singaporean Prime Minister Lee Hsien Loong to promote fraudulent investment schemes. Scammers spread these deepfakes on social media platforms such as TikTok and X.com, deceiving unsuspecting investors. To combat these scams, Elliptic recommends looking for specific red flags.
Read more: How Will Artificial Intelligence (AI) Transform Crypto?
“Fortunately, there are a number of red flag indicators that can help prevent you from falling victim to deep-fake scams. To verify the video’s authenticity, you can check if lip movements and voices are in sync, make sure shadows appear where you expect them, and check if facial activity like blinking eyes looks natural,” noted Elliptic.
Another common crime facilitated by AI is the creation of scam tokens. On many blockchains, it is relatively easy to create a new token, which scammers exploit to generate hype and artificially inflate prices before executing a “back-pull” or a “pump-and-dump” scheme .
Signs with names that refer to AI, such as “GPT”, were particularly popular targets. Elliptic’s investigation revealed numerous exit scams involving such tokens, highlighting the need for vigilance in token investments.
Cybercriminals have also co-opted major language models such as ChatGPT to aid their illegal activities. These AI tools can generate new code or audit existing code, which can be misused to identify and exploit vulnerabilities.
Although companies such as Microsoft and OpenAI have reported malicious use by state actors from Russia and North Korea, the technology has not yet reached a point where it can facilitate consistently successful cyberattacks. Nevertheless, the emergence of unethical AI tools such as HackedGPT and WormGPT on dark web forums poses a significant threat, offering services for phishing, malware creation and hacking.
The Intersection of AI and Crypto: Opportunities and Threats Revealed
Another area where AI is having an impact is the automation of scam deployment. Some scam operations involve creating fake investments, airdrops, or giveaway sites that are widely promoted through social media and messaging apps.
Once exposed, these sites are abandoned, and the process begins anew with fresh sites and marketing. AI is used to streamline this cyclical process, making it more efficient and harder to track.
Identity theft and the creation of false documents have long been staples of the dark web. Now, some services are incorporating AI to scale their operations. For example, one document delivery service advertised using AI to produce high-quality fake IDs and passports.
“Elliptic identified a crypto address used for payments to this service, which received enough payments to generate just under 5,000 fake documents in a month,” the firm added.
In January, the Commodity Futures Trading Commission (CFTC) issued a consumer warning about AI-powered scams. The agency has warned about schemes that promise massive returns through crypto-arbitrage algorithms and other AI-assisted technologies.
The CFTC emphasized that scammers often make false promises of quick profits, exploiting the public’s fascination with AI. One notable scam resulted in the loss of 30,000 Bitcoin (BTC), worth approximately $1.7 billion at the time.
Read more: AI in finance: Top 8 use cases of artificial intelligence for 2024
Indeed, the intersection of AI and crypto presents tremendous opportunities and significant challenges. While AI can improve security and efficiency in crypto, its potential for abuse highlights the need for a well-planned and knowledgeable response. By understanding these new trends, stakeholders can better protect the crypto ecosystem from the evolution of criminal tactics.
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