AI Used for Crypto Crimes on the Rise, Elliptic Warns

Elliptic implies that AI technology is still in its infancy and provides a plethora of advantages that could facilitate the industry’s expansion

According to a recent report from Elliptic, the crypto asset ecosystem is seeing an increase in the use of artificial intelligence (AI) to commit crimes.

Crimes involving artificial intelligence and cryptography

The report observed that criminals progressively utilized Generative AI to generate deepfakes and other deceptive materials to promote crypto scams.

The company maintains that:

“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.”

Additionally, there has been a substantial increase in investment platforms, Ponzi schemes, false trading bots, and scam tokens related to AI. Elliptic observed that fraudsters frequently employ trendy technology and buzzwords to develop tokens or investment schemes, resulting in exit scams. In addition, it included:

“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.”

In 2023, a false AI trading bot scam known as iEarn was a notable occurrence, resulting in an estimated $6 million in losses. It is important to note that the Commodity Futures Trading Commission (CFTC) issued a warning in January in response to the notable increase in AI trading programs.

Elliptic’s report underscored that criminals were also employing large language model (LLM) AI programs to identify vulnerabilities in project protocols. This discovery is consistent with a recent report by Microsoft and OpenAI, which suggests that cybercriminals are increasingly employing LLMs to improve their operations.

Additionally, AI technology is being implemented to facilitate the implementation of extensive disinformation campaigns and crypto schemes. Elliptic declared:

“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.