AI used for crypto crimes on the rise, Elliptic warns

Artificial Intelligence (AI) is increasingly being used to commit crimes in the crypto asset ecosystem, according to a new report from Elliptic.

AI-crypto crimes

The report noted that criminals increasingly relied on Generative AI to create deepfakes and other deceptive materials to promote crypto scams.

According to the firm:

“Doctored videos – or ‘deepfakes’ – of notable individuals promoting investment scams have targeted the likenesses of Elon Musk, former Singaporean Prime Minister Lee Hsien Loong and both the 7th and 8th Presidents of Taiwan Tsai Ingwen and Lai Ching-te. Promotional deepfakes are often posted across sites such as YouTube, Tiktok and [social media platform] X.”

These deepfakes usually lure unsuspecting individuals to invest in scam projects that could result in funds theft.

Furthermore, there has been a notable rise in AI-related scam tokens, investment platforms, Ponzi schemes, and fake trading bots. Elliptic noted that scammers often use trendy technology and buzzwords to create tokens or investment schemes, culminating in exit scams. It added:

“Beyond the creation of tokens, scammers have used AI as a means of driving up hype in fraudulent investment platforms. In particular, scammers have sought to capitalize on the potential of AI to enhance trading or arbitrage capabilities.”

One notable incident involved a fake AI trading bot scam called iEarn in 2023, which resulted in approximately $6 million in losses. Notably, this surge in AI trading bots prompted the Commodity Futures Trading Commission (CFTC) to issue a warning in January.

Elliptic’s report highlighted that criminals were also using large language model (LLM) AI programs to identify vulnerabilities in project codes. This finding aligns with a recent report by Microsoft and OpenAI, which indicates that cybercriminals increasingly use LLMs to enhance their operations.

Moreover, AI technology is being adopted to facilitate large-scale crypto scams and disinformation campaigns. Elliptic stated:

“AI can be used to accelerate and upscale this [disinformation] process by auto-generating social media posts and coding the necessary underlying infrastructure to distribute them effectively.”

Despite these growing threats, Elliptic believes AI technology is still in its infancy and offers numerous benefits. Mitigating these threats requires the collaborative efforts of all stakeholders, including law enforcement agencies, crypto compliance professionals, and AI users.

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