Crypto Scams Soar with AI: Chainalysis Warns of Biggest Year Yet

Crypto scams set for biggest year ever due to AI: Chainalysis

As a seasoned crypto investor, I can’t help but feel a sense of unease about the potential surge in cryptocurrency scams in 2025. This escalation seems to be driven by two significant factors: the advancement of artificial intelligence and the emergence of professional support services for these fraudulent activities. It appears that the criminal industry is evolving, becoming more sophisticated each day.

In simpler terms, Chainalysis, a company specializing in blockchain analysis, stated in their February 13th Crypto Scam Revenue 2024 report that advanced technologies like generative AI are making it easier and cost-effective for scammers to carry out fraudulent activities.

Elad Fouks, head of fraud products at Chainalysis, stated that GenAI is enhancing financial institutions’ primary danger – scams – by providing high-quality, cost-effective, and highly scalable fraud that takes advantage of human weaknesses.

He mentioned that it makes it easier for scammers to fabricate false identities, enabling them to pose as real individuals and circumvent identity authentication measures.

In 2024, Chainalysis determined that approximately $9.9 billion was earned from cryptocurrency scams, predominantly through pig butchering schemes. The organization anticipates this amount could exceed $12 billion in the future as they uncover more accounts linked to fraudulent activities and scams.

Leveraging the recently purchased fraud detection tool worth approximately $150 million, Chainalysis has disclosed that a whopping 85% of fraudulent activities are conducted using accounts that have been fully authenticated. This circumvents conventional identity-based safeguards, a concern accentuated by advancements in AI, as stated by Fouks.

According to Fouks, GenAI has the ability to create authentic-looking false content such as websites and advertisements, which can be used to carry out deceptive investments, purchases, and other frauds. This makes these scams appear more genuine and challenging to identify.

According to Deloitte’s Financial Services Center, it is projected that the combined impact of advanced artificial intelligence (AI) technologies such as generative AI, and deepfake technology could amount to a loss of around $40 billion for the American economy by the year 2027.

According to Chainalysis, the complexity of cryptocurrency fraud and scams has persistently grown, as exemplified by platforms like Huione Guarantee, which provides bona fide services but simultaneously harbors various illegal activities to facilitate deceitful schemes.

According to the analysis, the revenue of Huione, who are suspected scammers in the crypto sector, has grown at an extremely high rate each year when looking at the period from 2021 to 2024, as shown by a compound annual growth figure.

Specifically, the income for providers of AI services skyrocketed by a staggering 1,900%, implying a significant surge in the application of AI technology to aid fraudulent activities.

In December, the U.S. Federal Bureau of Investigation issued a warning about fraudsters exploiting advanced AI technology to trick people into investing in cryptocurrencies.

According to Chainalysis, there’s been a consistent 24% increase in estimated scam activity each year since 2020 when compared to their previous reports. They anticipate that when they account for scams powered by artificial intelligence, the overall losses from these schemes could be significantly higher.

According to a recent report published in January, it is projected that the total value of illicit cryptocurrency transactions could rise to approximately $51 billion by 2024. However, it’s worth noting that the proportion of illicit crypto activity relative to the entire market has hit its lowest point in three years.

2025-02-13 16:10

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