Massive Financial Losses Projected

Bitget, a rising cryptocurrency exchange, estimates that crypto scams using deepfake videos will lead to over $25 billion in losses in 2024. This projection represents a doubling from the previous year. The report, released on June 27, 2024, highlights a significant increase in deepfake incidents, citing a 245% rise globally based on data from Sumsub Research Center.

Geographical Impact and Crypto Sector Vulnerability

Countries including China, Germany, Ukraine, the United States, Vietnam, and the United Kingdom have been most affected, with a notable spike in deepfake activities in the first quarter of 2024. The crypto sector, in particular, has seen a dramatic 217% increase in scams compared to the first quarter of 2023, with losses exceeding $6.3 billion in the first quarter of 2024 alone. Bitget predicts these losses could reach $10 billion per quarter by 2025. The exchange warns that deepfake scams may constitute over 70% of all crypto crimes within the next two years.

Mechanics of Deepfake Crypto Scams

Deepfake crypto scams typically involve impersonating influential figures and celebrities to promote fraudulent investment schemes. Despite advancements in technology, scammers' tactics remain relatively unchanged, leveraging the appearance and voices of trusted personalities to legitimize their fraudulent projects. A recent high-profile case involved over 35 YouTube channels live-streaming a fake SpaceX launch, using AI-generated deepfake videos to mimic Elon Musk.

Community Response to Elon Musk Deepfake Scam

One particularly notorious deepfake video showed a fake Elon Musk promising crypto giveaways in exchange for Bitcoin or Ethereum deposits. This scam video, which ran for five hours and garnered over 30,000 views, prompted warnings from the cybersecurity firm Engadget. The video, leveraging Musk’s voice and appearance, directed viewers to a site that promised to double their crypto deposits. The large number of views propelled the video to YouTube’s “Live Now” recommendations, exacerbating its reach. The crypto community quickly mobilized on social media platform X, issuing warnings to avoid the scam.

AI-Driven Crypto Crime on the Rise

Elliptic’s recent report underscores the growing threat of AI-fueled crypto crimes, marking a new era of cyber threats. As AI technology advances, it poses increased risks of misuse by malicious actors, particularly exploiting public unfamiliarity with such innovations. On the dark web, forums actively discuss the criminal potential of large language models (LLMs) for crypto-related crimes, including reverse-engineering seed phrases to access wallets and automating phishing and malware attacks.

Criminal AI Tools

Unethical versions of AI models, such as WormGPT, are being marketed for illegal activities. These models are designed to evade detection by legitimate AI systems and are used for phishing, carding, malware creation, and generating malicious code. Elliptic emphasizes the need for heightened awareness of warning signs indicating illicit activities to ensure the long-term robustness of technological innovations and mitigate early-stage harmful effects.

The increasing sophistication of AI and deepfake technologies poses significant challenges for the crypto sector. Bitget’s report highlights an urgent need for robust security measures and heightened vigilance to combat the rising tide of deepfake-related crypto scams. The involvement of AI in facilitating these scams underscores the importance of developing advanced countermeasures to protect investors and maintain the integrity of financial markets.