In a recent advisory, the Securities and Futures Commission (SFC) of Hong Kong issued a strong caution regarding a cryptocurrency scam utilizing deepfake technology. This advanced scam involves the use of AI-generated videos featuring tech mogul Elon Musk to endorse a deceptive trading platform named “Quantum AI.” By producing highly realistic videos that portray Musk endorsing the platform, scammers capitalize on the trustworthiness of the billionaire to attract unsuspecting investors.

While not a new scheme, the persistence and advancement of this scam highlight the growing trend of artificial intelligence in fraudulent activities. Asia, in particular, has become a fertile ground for such schemes due to its rapid digitalization and the prevalence of online financial transactions. The resurgence of this scam emphasizes the critical need for increased awareness and enhanced cybersecurity measures to combat fraud driven by AI.

SFC’s Response and Actions

On May 8, the SFC publicly denounced Quantum AI for making unrealistic promises of exceptionally high returns. Such claims are typical of fraudulent schemes, aiming to entice and mislead potential victims with promises of unrealistically high profits. In light of the escalating threat posed by deepfake technology, the SFC has taken proactive steps to mitigate the impact of these scams.

The regulatory body has urged the Hong Kong Police Force to block access to websites and social media platforms associated with Quantum AI. Currently, these domains are inaccessible, and related Facebook groups have been taken down. This decisive move by the authorities forms part of a broader initiative to safeguard the public and curb the proliferation of deepfake-related fraud. The SFC’s actions demonstrate a commitment to upholding the integrity of Hong Kong’s financial system and shielding investors from sophisticated digital threats.

Impact and Regional Vulnerability

Deepfake scams have emerged as a significant issue in Hong Kong and the wider Asia-Pacific region. According to a report by identity verification firm Sumsub, incidents of deepfake fraud skyrocketed by a staggering 1,530 percent last year, with countries like Vietnam and Japan witnessing the highest number of attacks.

This concerning trend is attributed to the increasing digitization of financial transactions in emerging Asian markets. Penny Chai, Vice President of Business Development at Sumsub in APAC, highlighted that the high volume of instant cross-border transactions in the region, particularly in financial hubs like Hong Kong, presents ample opportunities for scammers. The complexity and scale of financial activities in these markets make them attractive targets for deepfake fraudsters who exploit AI technology to capitalize on vulnerabilities.