Artificial Intelligence (AI) is increasingly utilized for criminal activities within the cryptocurrency ecosystem, according to a recent report by Elliptic.

AI-enabled crypto crimes

The report highlights a growing trend where criminals employ Generative AI to produce deepfakes and other deceptive content aimed at promoting crypto scams. Elliptic noted:

"Deepfake videos featuring prominent figures like Elon Musk, former Singaporean Prime Minister Lee Hsien Loong, as well as Taiwan's Presidents Tsai Ingwen and Lai Ching-te, have been used to endorse investment scams. These fraudulent deepfakes are typically distributed on platforms such as YouTube, TikTok, and X."

Such manipulated videos often lure unsuspecting individuals into investing in fraudulent projects, leading to potential loss of funds.

In addition to deepfakes, there has been an increase in AI-driven scam tokens, fake investment platforms, Ponzi schemes, and counterfeit trading bots. Elliptic observed that scammers frequently leverage trendy technologies and industry jargon to create tokens or investment schemes, culminating in exit scams. The report stated:

"Beyond token creation, scammers exploit AI to create hype around fraudulent investment platforms, often claiming enhanced trading or arbitrage capabilities."

One notable incident mentioned in the report involved the 2023 iEarn scam, where a fake AI trading bot led to losses totaling approximately $6 million. This surge in AI-related trading bots prompted a warning from the Commodity Futures Trading Commission (CFTC) in January.

Elliptic's findings underscored that criminals are also utilizing large language model (LLM) AI programs to identify vulnerabilities in project codes, echoing concerns raised in a recent Microsoft and OpenAI report on cybercriminal use of LLMs.

Despite the growing threats posed by AI-enabled crypto scams and disinformation campaigns, Elliptic acknowledges the potential benefits of AI technology while emphasizing the need for collaborative efforts among stakeholders, including law enforcement, crypto compliance experts, and responsible AI users, to mitigate these risks effectively.