Can crypto survive the AI-powered scam surge?

Chainalysis, a blockchain analytics firm, has sounded the alarm over the spike in AI-powered crypto scams. Since 2021, AI scam services have grown by 1,900%, and in 2024, crypto wallets linked to scams received over $9 billion. 

The report from Chainalysis expects this figure to exceed $12 billion as regulators uncover more fraudulent wallets. 

As investors cheered the rise of AI in 2024, a crypto evil lurked in the shadows and took advantage of this technology, making massive profits from illicit activity. AI service providers saw scammers’ demand for their technology explode, with revenue rising by a staggering 1,900%.

Elon Musk, Lee Hsien Loon (Singapore’s senior minister), and the former president of Taiwan, Tsai Ing-wen, are some of the trending faces in crypto scams as hackers use AI to create and post deepfakes of these individuals on TikTok and X to endorse their shady services. Because these celebrities can influence the masses, fraudsters develop AI-generated endorsements that look believable to persuade more victims to invest. 

High-yield investment and pig butchering scams take the lead with the highest crypto revenues in 2024

Pig butchering is a romance opportunity scammers use to build relationships with victims on dating apps or social media and persuade them to invest in crypto shams. The term “pig butchering” stems from the idea that these fraudsters first “fatten” their victims by building fabricated bonds before “butchering” their wallets. 2024 saw pig butchering’s revenue soar by about 40% year over year (YoY). 

On the other hand, high-yield investment scams are basically Ponzi schemes promising passive income and high returns in short time frames. Smart Business Corp, for example, included Bitcoin in its portfolio and promised unreasonable returns to affiliates in Spanish-speaking countries in 2024 but never fulfilled this promise.

To date, the Ponzi scheme has received over $1 billion on-chain. While HYIS inflows dropped by about 35% in 2024, the scams still managed to pull in half of all scam revenue. 

AI tools teach Cybercriminals how to hack crypto platforms

ChatGPT, among other AI tools, can easily generate or change new code. Black hat hackers exploit this ability to identify weaknesses in blockchain systems and smart contracts by creating phishing emails. However, most of these AI tools have gotten better at identifying and declining malicious prompts, forcing cybercriminals to move to dark web forums. 

Still, with illegal AI models like WormGPT accessible to everyone, criminals without any technical skills can easily launch a cyber attack. These mod GPTs boast carding, phishing, malware, and scanning capabilities that allow for unethical money-making. 

The massive scale of AI-powered crypto scams doesn’t downplay the good that comes with artificial intelligence technology. However, just because the benefits exceed the potential for criminal exploitation doesn’t mean we should take these illegal activities for granted. 

It is hard to tell whether crypto will survive such scams, but it all depends on the collective effort. Government agencies, regulators, and blockchain firms need to exert sustainable efforts when fighting crypto scams because the more AI evolves, the better these scammers adapt.