- Artificial intelligence helped boost crypto scam revenue to record levels in 2024, Chainalysis says.
- AI allows scammers to impersonate others and generate realistic-looking content.
- Revenue from pig butchering scams jumped 40% year-over-year.
Investors cheered the artificial intelligence boom last year, but the tech also fueled a dizzying rise in illicit activity in one corner of the market.
Cryptocurrency scammers embraced AI to rake in massive profits in 2024, with the amount defrauded from victims likely reaching a record $12.4 billion, research firm Chainalsysis estimates.
According to its latest report, AI service providers exploded in popularity among crypto scammers last year. Their technology allows scammers to impersonate others or generate realistic-looking content, such as websites and listings.
AI vendors on the Huione Guarantee forum — alleged to be a “one-stop-shop for illicit actors needing technology” — saw revenue soar by 1,900%. The forum hosts dozens of such vendors. One example cited by Chainalysis offered “face-changing services” for $200 in crypto.
“GenAI is amplifying scams, the leading threat to financial institutions, by enabling high-fidelity, low-cost, and highly scalable fraud that exploits human vulnerabilities,” Elad Fouks, head of fraud products at Chainalysis, said in the report. “It facilitates the creation of synthetic and fake identities, allowing fraudsters to impersonate real users and bypass identity verification controls.”
If AI technology is allowed to exponentially scale crypto scams in the future, fighting and deterring cyber crime is likely to grow more challenging, Chainalysis added.
The growing "professionalization" of the scam ecosystem isn't helping, with Huione boosting sophistication and efficiencies in the fraud market. The forum has processed $70 billion in crypto transactions since 2021, and offers actors resources for scams and money laundering operations.
On-chain activity tracked by Chainalsysis found that Huione Guarantee has a big role in Southeast Asia's pig butchering industry, a type of scam in which a relationship is first built with the victim in order to convince them to make a fraudulent investment.
Pig butchering revenue has increased nearly 40% year-over-year.