Alert! AI Now Leveraged for Crypto Crime, Elliptic Warns

Bittime - Blockchain intelligence firm Elliptic in its latest report entitled “AI-Based Crime in the Crypto Asset Ecosystem” revealed the new threat posed by artificial intelligence (AI) in cryptocurrency crime.

This case study-backed report identifies five emerging types of AI-based crime, ranging from deepfake fraud to state-backed cyberattacks. The report emphasizes that this threat is still in its early stages.

Deepfake AI Used for Crypto Fraud

Although AI has the potential to bring significant transformation to the global economy, this technology also has risks. According to Elliptic, criminals have started to utilize AI for illegal activities in the crypto asset ecosystem.

One of the report's findings was the use of AI to create deepfakes. These highly realistic videos and images are used by fraudsters to impersonate famous figures such as celebrities, politicians and industry leaders to make their fake projects look legitimate.

“Crypto giveaway and crowdfunding scams are now increasingly using deepfake videos of CEOs and crypto celebrities to encourage victims to send funds to fraudulent crypto addresses,” the report said.

The report cites specific examples of deepfakes targeting Ripple (XRP) and its CEO, Brad Garlinghouse, especially following the company's legal victory against the United States Securities and Exchange Commission (SEC) in July 2023. Additionally, other individuals have been targets of deepfake scams including Elon Musk, former Singapore Prime Minister Lee Hsien Loong, and the 7th and 8th Presidents of Taiwan, Tsai Ing-wen and Lai Ching-te.

Anne Neuberger, United States Deputy National Security Advisor for Cyber ​​and Emerging Technologies, also highlighted growing concerns about AI misuse. He emphasized that AI is not only used for everyday fraud, but also for more sophisticated criminal activities.

“Some North Korean and other nation-state actors and criminal actors have been seen trying to use AI models to speed up the creation of malicious software and identify vulnerable systems,” Neuberger said.

GPT Tokens and Activity on the Dark Web

The hype around AI has also fueled the creation of GPT-themed tokens, which are often promoted with promises of high returns. Elliptic warns that while some of these tokens may be legitimate, many are promoted on amateur trading forums with false claims of official relationships with AI companies like ChatGPT.

The report also revealed discussions on dark web forums about leveraging AI models to reverse engineer crypto wallet seed phrases and bypass authentication for various services.

“Across various dark web cybercrime forums, Elliptic has identified discussions discussing the use of Large Language Model (LLM) models to reverse engineer crypto wallet seed phrases, bypass authentication for services like OnlyFans, and provide an alternative to image disclosure manipulation services like DeepNude,” said the report.

Elliptic also stated that most AI-related threats in the cryptocurrency sector are still in their infancy. This further emphasizes the importance of vigilance and proactive steps to overcome the new forms of crypto crime that are developing.

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