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AI fuels rise in crypto scams

AI fuels rise in crypto scams

GrafaGrafa2025/02/14 02:50
By:Mahathir Bayena

According to a Chainalysis report, cryptocurrency scams are poised for a record year, driven by the increasing sophistication of the fraud industry and the use of generative artificial intelligence (AI).

The analytics firm's February 13 report, "Crypto Scam Revenue 2024," highlights how generative AI is making scams "more scalable and affordable for bad actors to conduct."

Chainalysis estimates that crypto scam revenue reached approximately $9.9 billion in 2024, with "pig butchering" scams leading the way.

However, the firm anticipates this figure will likely exceed $12 billion as it identifies more addresses associated with fraudulent activities.

Elad Fouks, Chainalysis’ head of fraud products, explained that generative AI is amplifying scams by enabling "high-fidelity, low-cost, and highly scalable fraud that exploits human vulnerabilities."

AI facilitates the creation of synthetic and fake identities, allowing fraudsters to impersonate real users and bypass identity verification controls.

Chainalysis discovered that 85% of scams involve fully verified accounts, a situation exacerbated by AI.

The report also sheds light on the growing sophistication of crypto fraud and scams, referencing operations like Huione Guarantee, a peer-to-peer marketplace that offers both legitimate and illicit services aiding scamming operations.

The revenue of AI service vendors within the scamming sector has grown by 1,900%, indicating a significant increase in the use of AI technology to facilitate scams.

Huione scam technology vendors collectively received at least $375.9 million of crypto in 2024.

Chainalysis estimates its annual assessments of scam activities have grown by an average of 24% between yearly reporting periods since 2020.

The firm expects total losses from scams to be even higher after considering AI-powered scams.

However, it's important to note that while Chainalysis predicts a surge in crypto scam revenue, their initial data indicated a drop in value received by illicit cryptocurrency addresses in 2024, totaling $40.9 billion.

This figure is expected to increase as more illicit addresses are identified.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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