As with any new technology, the advancement of AI innovations in the crypto industry has spurred their use for criminal purposes, according to a report by Elliptic.
Experts from the company identified five main typologies for such criminal activities:
- the use of generative AI to create deepfakes and promotional materials for scams;
- execution of fraud and market manipulation, including the launch of AI tokens, investment platforms, Ponzi schemes, and increasingly prevalent romantic scams (“pig butchering”);
- utilization of large language models to discover code vulnerabilities and develop exploits;
- scaling crypto scams and disinformation campaigns with AI tools;
- creating new types of economic activity on darknet markets, such as producing fake videos and counterfeit documents to pass KYC procedures on crypto platforms.
Experts acknowledged that while these activities are not unique to the industry, they have specific characteristics within it.
The Range of Criminal AI Use in the Industry Expands
They examined 18 real cases of criminal AI use. For instance, perpetrators used deepfakes of Tesla and SpaceX founder Elon Musk and Ripple CEO Brad Garlinghouse to promote cryptocurrency airdrops. Allegedly, by sending a certain amount of coins to the fraudsters’ address, users would receive double the amount in return.
In romantic scams aimed at luring victims into crypto investment fraud through online communication, perpetrators use AI to refine scripts and enhance the appeal of characters, noted Elliptic experts.
They found that fraudsters widely use technology to create fake websites and marketing materials, including fake publications in well-known outlets, to scale scams.
Experts discovered several darknet offers for generating fake identity document scans, enabling account creation on crypto platforms.
According to Elliptic specialists, these services are gradually replacing traditional image forgery methods using Photoshop. Thanks to technology, they can offer “package deals.”
For example, one service called OnlyFake Document Generator 3.0 offers a document for $15, ten different IDs for $99, and fifty for $249. Fraudsters advertise their services using an image of the famous movie character John Wick, played by Keanu Reeves.
A Collective Effort Needed to Counteract
Experts noted that the criminal use of AI in the crypto industry is still in its early stages. Implementing effective countermeasures and prevention at this stage could significantly mitigate growing threats, they believe.
Elliptic’s main recommendations include:
- for technology developers — consider the potential criminal use of created solutions, ensuring responsible and safe operation;
- for policymakers and regulators — establish regulatory barriers to criminal use of beneficial technologies and provide legal clarity regarding liability for consequences;
- for law enforcement — consider changing cybercriminal strategies, using AI and blockchain to detect and identify fraud, malware, and fake identifiers;
- for compliance specialists — strengthen monitoring measures for suspicious transactions related to criminal AI activity;
- for users — pay more attention to “red flags” indicating risks.
“Finally, it is worth reiterating that, as with most new technologies, the benefits of AI and crypto assets far outweigh their potential illegal use,” concluded the experts.
Earlier, billionaire investor Warren Buffett compared the threat of deepfakes to nuclear weapons.