AI Speeding Up Crypto Website Fraud and Influencer Scams: What You Need to Know

The world of cryptocurrency is exciting and full of potential, but it also attracts bad actors. Now, with the rise of artificial intelligence (AI), these scammers are getting a significant boost. Imagine AI crafting convincing fake websites, generating believable influencer endorsements, and automating the spread of misinformation. It’s happening, and it’s accelerating the cycle of crypto scams. Let’s dive into how AI is being weaponized and what you can do to protect yourself.

How AI Supercharges Crypto Scams

AI is a double-edged sword. While legitimate crypto companies can leverage AI to improve their services, scammers are exploiting it to enhance their malicious activities. According to a recent Elliptic report, AI significantly speeds up the deployment and sustainability of crypto scams, posing a serious threat to both the AI and crypto industries.

• Efficiency: AI automates tasks like generating text, images, and even entire websites, reducing the time and resources needed to launch a scam.
• Sophistication: AI creates more convincing fake profiles and marketing materials, making scams harder to detect.
• Scalability: AI automates social media posting and infrastructure setup, allowing scammers to reach a wider audience.

The Role of Influencers and Fake Websites

Social media influencers can manipulate prices by promoting specific crypto products to their followers. This often involves tactics like “pump and dump,” where they artificially inflate the price of a cryptocurrency and then sell their holdings for a profit, leaving their followers with losses.

Similarly, scammers create fake investment, airdrop, or giveaway websites, promoting them widely on social media. Once they gain enough traction, they execute a “rug pull,” disappearing with the victims’ funds.

AI significantly streamlines this process by generating:

• Fake employee images
• Marketing materials
• Realistic website content

This makes the scams appear more legitimate and professional, increasing their success rate.

Examples of AI-Powered Crypto Scams

Here are a couple of real-world examples of how AI is being used in crypto scams:

1. “Jessica” the AI Bot: A Reddit user reported interacting with an AI-powered bot named Jessica, who promised huge returns through AI-powered crypto trading. After several requests for increasing Ethereum (ETH), the user lost over $1300. Jessica disappeared after receiving the final payment, leaving the user with no returns.
2. NovaDrainer: This crypto affiliate platform offers “scam-as-a-service,” creating crypto investment sites for affiliates and splitting the proceeds. It uses AI to process tokens and generate SEO-optimized website designs, openly marketing its use for phishing and draining victims’ crypto.

How to Protect Yourself: The DECODE Framework

Addressing these challenges requires a proactive approach. The crypto industry must invest in advanced security measures and collaborate with AI developers to create technologies capable of detecting and countering scams. Raising awareness among crypto users about the potential risks and educating them on identifying and avoiding scams is also crucial.

The Elliptic report recommends using the DECODE (detect, educate, cooperate, defend, enforce) framework for mitigating emerging crime trends:

Detect

• Use blockchain analytics to identify payments to AI-related illicit services.
• Use AI-enhanced blockchain analytics to detect crime.

Educate

• Raise awareness among users of crypto and AI on both existing and recent red-flag indicators of scams.
• Educate users and employees on methods to identify deep fakes.

Cooperate

• Share data to expand the capabilities of relevant stakeholders to mitigate AI-enhanced crypto crime.
• Share best practices across stakeholders.

Defend

• Ensure that new AI and crypto technologies are crime-proofed during development.
• Equip compliance teams.

Enforce

• Prioritize interventions against illicit services experimenting with AI.
• Ensure that new and fast-paced innovations in AI are integrated with capacity building and training.

Stay Vigilant in the Age of AI Crypto Scams

AI is transforming the landscape of crypto scams, making them faster, more sophisticated, and harder to detect. By staying informed, adopting proactive security measures, and utilizing frameworks like DECODE, you can protect yourself from falling victim to these evolving threats. The key is to remain vigilant and skeptical, especially when dealing with new and unfamiliar crypto ventures.