Be warned, AI-powered crypto scams are on the rise — TradingView News

AI is here and it’s already changing things in the crypto world. Coders use it to code, researchers use it to do research, and unfortunately, scammers use it to scam. That’s the conclusion of a new report from blockchain analytics firm Elliptic on the emerging risks of AI in perpetuating the criminal use of crypto.

This is an excerpt from The Node newsletter, a daily digest of the most important crypto news from CoinDesk and beyond. You can subscribe to receive the full newsletter here.

Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

“The rise of artificial intelligence has shown enormous potential to drive innovation, particularly in the field of cryptography. However, as with any emerging technology, there remains a risk that malicious actors will seek to exploit new developments for illicit purposes,” the report said.

Although the risk remains low at present, the company’s researchers have identified five “typologies” in which AI is already being deployed in harmful ways. These include creating and spreading deepfakes to create more convincing scams, creating AI scam tokens to capitalize on hype, using large language models to design hacks, spreading misinformation and create more convincing phishing websites/prompts to facilitate identity theft.

Knowledge of these new (or frankly old, but now supercharged) scams means users can stay ahead of the game. This means that crypto users should become more familiar with the most common types of crypto-related scams. CoinDesk has a good report on this front here, covering all the basics like social media scams, Ponzi schemes, rug pulls, and “romance scams” (now often called “pig butchery”) .

“The reason there is no simple way to solve the problem is that it is actually multiple problems, each with its own variables and solutions,” wrote Pete Pachal, author of the excellent Media CoPilot Substack, in a recent article on deepfakes, AI and crypto.

According to Pachal, who recently spoke at a Consensus 2024 session titled “From Taylor Swift to the 2024 Elections: Deepfakes vs. Truth,” deepfakes have become increasingly difficult to spot as AI image generation has improved. For example, earlier this month, a video circulated on social media of fake Elon Musk promoting a fake Quantum AI trading platform that promised users fake returns that apparently fooled more than a handful of people.

Cases like these will likely only increase. Verification firm Sumsub says crypto was “the primary target industry” for nearly 90% of deepfake scams detected in 2023. While the effectiveness of these scams is unclear, the FBI’s online crime report revealed that crypto investment losses in the United States increased by 53% to $3.9. billion last year.

See also: This is how fraudsters can drain your crypto wallet

However, it should be noted that fraud cases in the crypto industry are often only accidentally linked to crypto, as it happens to be a topic that attracts a lot of attention and is often complicated for people who are not steeped in this culture.

As CFTC Commissioner Summer Mersinger told CoinDesk: “I think it’s a little unfair because a lot of these cases are just ordinary frauds; someone steals someone else’s money, someone pretends to buy crypto, but doesn’t actually buy the crypto. So we’ve seen this play out regardless of what the hot topic of the moment is.

If there’s any consolation, it’s that AI-generated images, videos, and text are still relatively easy to notice if you know what to look for. Crypto users in particular should be vigilant, as it is common for even high-profile figures to fall for social engineering schemes or malicious scripts.

Taylor Monahan, builder of MetaMask, offers some sage advice here: always know you’re a potential target and actually double-check that what you’re clicking on is what it says it is.

Crypto is already a low-trust environment, given the nature of the technology. And it could go even lower.