AI is speeding up crypto website fraud and influencer scams

Early integration of AI into crypto offers opportunities for efficiency as well as fraud. According to the Elliptic report, artificial intelligence is helping scammers accelerate and amplify circular crypto scams.

By now we have all heard of artificial intelligence and its many use cases. Some use cases are legitimate and beneficial for crypto startups, while others allow bad actors and scammers to prey on victims. AI can enhance legitimate crypto companies by producing text, images, websites, videos, and other content. In addition, new avenues are opened for illegal activities.

According to a recent Elliptic report, AI could accelerate the distribution and sustainability of crypto scams, posing a significant threat to the credibility of the AI ​​and crypto industry.

Scams involving social media influencers and crypto websites

Crypto influencers who use their followers and personalities to promote specific crypto products can use their influence to manipulate prices in a variety of ways. Influencers often use a tactic known as “pump and dump,” in which they promote a particular cryptocurrency to artificially increase its price. Influencers increase the price by encouraging followers to invest. They then sell it, causing it to fall, and make a profit at the expense of their followers.

Influencers may use their platforms to spread exaggerated or false claims, which can cause fear and panic selling in the market. They can then purchase cryptocurrencies at lower prices.

Like influencers, crypto scammers work in cycles. They create scam investments, airdrops or giveaway sites that are widely promoted on social media and messaging apps. Once these sites gain enough traction and controversy, the scammers perform a “flip-flop” that disappears with the victims’ funds, leaving them empty-handed. The process is cyclical, so once the rug is pulled, they often start over with a new token, a different site, and new marketing strategies.

Creating all these scam documents, from social media accounts to websites and user interfaces, is time-consuming, resource-intensive, and costly. AI tools can now significantly streamline this process.

For example, AI can make scams appear more legitimate and professional by generating fake employee images and other marketing materials, according to the Elliptic report. This not only saves time, but also increases the complexity of scams, making them harder to detect.

In order for scammers to make as much money as possible, they need to set up fraud operations and connect with a large number of people. They typically used social media bots to widely spread fraudulent marketing and messages. But thanks to artificial intelligence, fraudsters can take this approach to the next level by automating and editing social media posts and establishing the necessary infrastructure for their efficient distribution.

Examples of fraud

For every Reddit user, a person named Jessica, presumably an AI-powered bot, claimed to offer massive returns through AI-powered crypto trading after the user clicked on an investment ad. After a series of requests for increased Ethereum (ETH) under the guise of fees and investments, the user gave Jessica over $1,300. The bot promised returns of over $6000 but never returned the winnings. Jessica disappeared after receiving the final payment.

Another example includes NovaDrainer, a Canadian and UK-based crypto affiliate platform that offers scams as a service that creates crypto investment sites for affiliates and splits the revenues. It claims to use AI to process tokens and create SEO-optimized website designs. Although it supports legitimate projects, it openly markets its use for phishing purposes and draining victims of their crypto.

Last year, the platform received 2,400 crypto token variants from more than 10,000 wallets that were likely victims of fraud. Elliptic’s analysis reveals that NovaDrainer uses a complex cross-chain obfuscation strategy involving decentralized exchanges, cross-chain bridges, and coin exchange services to manage stolen funds. However, processes are not automated through artificial intelligence.

Preventive measures and regulations

Overcoming these challenges requires a proactive approach. The crypto industry should invest in advanced security measures and collaborate with artificial intelligence developers to create technologies that can detect and counter scams. Additionally, it is crucial to raise awareness among crypto users about potential risks and educate them on how to identify and avoid scams.

The elliptical report recommends using the DECODE (detect, educate, collaborate, advocate, enforce) framework to reduce emerging crime trends.

To determine

Use blockchain analytics to identify payments to illegal AI-related services Use AI-enhanced blockchain analytics to detect crime

Educate

Raise awareness among crypto and AI users of both current and current red flags of fraud Educate users and employees on methods to identify deepfakes

Collaborate

Sharing data to expand capabilities of relevant stakeholders to reduce AI-powered crypto crimes Share best practices among stakeholders

To defend

Ensure new AI and crypto technologies are crime-proof during development Equip compliance teams

Make it mandatory

Prioritize interventions against illicit services experimenting with AI Ensure new and fast-paced innovations in AI are integrated with capacity building and training