The world of cryptocurrency continues to expand, but so do the risks. A report recently published by Chainalysis found that cryptocurrency scams took at least $9.9 billion in 2024, with projections suggesting that the final figure may reach $12.4 billion. This alarming rise in fraudulent activity is being driven in part by the increasing use of generative AI, which allows scammers to operate with greater sophistication and efficiency.
AI has rapidly changed many industries, and unfortunately, scammers are taking advantage of its capabilities. With the help of generative AI, fraudsters can create convincing fake identities, automate deceptive conversations, and scale their operations faster than ever before. AI-powered chatbots and deepfake technology allow scammers to impersonate real people and trusted institutions, increasing the difficulty of detecting fraudulent schemes.
One of the fastest-growing types of crypto fraud is known as “pig butchering.” In these schemes, scammers nurture trust with their victims over time, often pretending to be romantic partners or business mentors, before luring them to make investments in fake cryptocurrency projects. Chainalysis reports that these scams increased by nearly 40% in 2024, demonstrating how criminals are leveraging AI to manipulate emotions and deceive their targets.
Another major scam gaining traction is the use of “crypto drainers.” These schemes involve hackers gaining access to victims’ digital wallets and draining their funds. AI tools have made it easier for scammers to craft realistic phishing messages that trick users into revealing their private keys or login credentials. Additionally, fraudulent high-yield investment programs, which promise unrealistic returns, continue to thrive, luring in victims who are unaware of the risks.
Additionally, scammers are also using AI to impersonate regulatory authorities. In one instance, fraudsters created a deepfake video of a U.S. Securities and Exchange Commission (SEC) official to convince victims that their investments were legitimate. These tactics make it increasingly difficult for individuals to distinguish real opportunities from scams.
Another emerging trend is the use of cryptocurrency ATMs in fraudulent schemes. Scammers pose as law enforcement agents or technical support representatives and convince victims to deposit money into these machines, making the transactions nearly impossible to trace or recover.
With cryptocurrency gaining mainstream popularity, particularly amid expectations of regulatory changes, scams are likely to continue evolving. Chainalysis warns that unless stronger security measures and awareness campaigns are implemented, AI-driven fraud will only become more widespread.
As crypto adoption grows, individuals and businesses must stay vigilant, educate themselves on emerging scam tactics, and take proactive steps to protect their digital assets. The rise of AI-powered scams underscores the need for better cybersecurity measures and stricter regulations to safeguard the crypto ecosystem.
All crypto industry actors, such as Riot Platforms (NASDAQ: RIOT) would do well to constantly track the changing ways in which illicit actors target their victims and adapt their cybersecurity measures to avert such threats.
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