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Beware: AI-powered scams are on the rise
Artificial intelligence has arrived and is already changing things in the world of cryptocurrencies. Programmers use it to program, researchers use it to do research, and unfortunately, scammers use it to scam. That’s according to a new report from blockchain analytics firm Elliptic on the emerging risks of artificial intelligence in perpetuating the criminal use of cryptocurrencies.
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“The rise of artificial intelligence has shown enormous potential to drive innovation, not least in the cryptocurrency sector. However, as with any emerging technology, there remains a risk that threat actors will seek to exploit new developments for illicit purposes,” we read in the report.
While the risk remains small at this time, the company’s researchers have identified five “types” where AI is already being used in nefarious ways. These include creating and spreading deepfakes to make more convincing scams, creating AI scam tokens to exploit hype, using large language models to devise hacks, spreading misinformation, and creating scam websites/prompts. more convincing phishing to facilitate identity theft.
Awareness of these new (or, frankly, old, but now enhanced) scams means users can stay ahead of the curve. This means that cryptocurrency users should become more familiar with the most common types of cryptocurrency scams. CoinDesk has good reporting on that front here covering all the basics such as social media scams, Ponzi schemes, carpetbaggers and “romance scams” (now often referred to as “pig slaughter”).
“The reason there is no simple way to approach the problem is because it is actually multiple problems, each with its own variables and solutions,” wrote Pete Pachal, author of the excellent Media CoPilot Substack. a recent piece on deepfakes, artificial intelligence and cryptocurrencies.
Cases like these are likely to grow. Verification firm Sumsub says cryptocurrencies were “the main target sector.” almost 90% of deepfake scams detected in 2023. While it’s unclear how effective these scams have been, the FBI’s Online Crime Report found that cryptocurrency investment losses in the US grew 53% to $3.9 billion last year.
However, it is worth noting that often cases of fraud in the cryptocurrency industry are only incidentally related to cryptocurrencies, because it is a topic that attracts a lot of attention and is often complicated for people not immersed in the culture.
As CFTC Commissioner Summer Mersinger he told CoinDesk: “I think it’s a little unfair because a lot of these cases are simple frauds; someone who steals someone else’s money, someone who claims to buy cryptocurrencies, but doesn’t actually buy cryptocurrencies. So we’ve seen this play out with whatever the hot topic is at the time.
If there’s any consolation, it’s that AI-generated images, videos and texts are still relatively easy to notice if you know what to look for. Cryptocurrency users in particular should be vigilant, considering how common it is even high-profile people be fooled by social engineering schemes or malicious scripts.
MetaMask builder Taylor Monahan has Wise advice here: Always know that you are a potential target and actually verify that what you are clicking on is what it appears to be.
Cryptocurrency is already a low-trust environment given the nature of the technology. And it could drop even further.