Understanding AI Scams in Cryptocurrency: Tips to Protect Yourself

AI crypto scams, including celebrity deepfakes, voice cloning, and AI phishes, are on the rise. Here’s how to protect yourself.

Key Takeaways:

• The most prevalent AI-powered scams in the crypto space include deepfake videos of celebrities promoting fake projects, voice cloning to impersonate family members in distress, and phishing sites that mimic legitimate crypto platforms.
  
  
• Red flags for AI crypto scams include unrealistic promises of high returns, pressure to act quickly, and unsolicited requests for sensitive information like crypto wallet details.
  
  
• To protect against these scams, verify sources meticulously, such as double-checking URLs and caller identities, and be sceptical of unsolicited messages or too-good-to-be-true offers.

Introduction

As artificial intelligence (AI) technology advances, scammers are harnessing its power to create more sophisticated and convincing frauds. AI-powered scams pose a significant risk to users’ online security and financial well-being, making it crucial to stay informed and vigilant.

In this article, learn about common types of AI-powered frauds, including impersonation, identity theft, and phishing attacks. 

Common Types of AI-Powered Crypto Scams

Deepfake Videos and Images

Scammers are using AI to create convincing deepfake videos and images of celebrities and authority figures (like politicians) to promote fraudulent cryptocurrency projects. These deepfakes often feature well-known personalities like Elon Musk, Bill Gates, or Mark Zuckerberg endorsing fake investment opportunities. The videos are distributed across social media platforms like TikTok and X to reach a wide audience.

To protect against this, watch out for these red flags:

• Promises of unrealistic returns in a short time.
• Lip movements not syncing with the audio.
• Unnatural facial expressions or blinking patterns.
• Shadows appearing in unexpected places.

Voice-Cloning Scams

AI-powered voice cloning is another emerging threat in the crypto world. Scammers can now replicate a person’s voice using as little as 3–10 seconds of audio. They often pull voice samples from social media posts or voicemail messages. With the cloned voice, they make panicked calls to family or friends, creating a sense of urgency to trick them into sending money or sharing sensitive information.

To guard against voice-cloning scams:

• Create a secret code word with family members for emergency situations.
• Verify the caller’s identity by calling back on a known number.
• Be cautious of any urgent requests for money or sensitive information.

Voice-cloning technology has also allowed scammers to replicate a person’s voice and use it to successfully authenticate with banks, posing a significant threat to financial security.

AI-Generated Phishing Attacks

AI is enhancing the sophistication of phishing attacks in the crypto space, as scammers are using it to create convincing lure sites that mimic legitimate cryptocurrency platforms, often claiming to offer advice and tutorials for various crypto products. The use of AI-generated content makes it challenging to distinguish between genuine and fraudulent sites.

To avoid falling victim to AI-generated phishing:

• Be sceptical of unsolicited links, even in comments on legitimate websites.
  
  
• Double-check the URL of any crypto platform being used.
  
  
• Be wary of sites asking for login details or wallet recovery phrases.
  
  
• Enable strong security measures like multi-factor authentication (MFA) and utilise phishing-resistant technologies like a Passkey and hardware token.
  
  
• Double-check and verify what is about to be approved or signed by a wallet.

Other Ways AI Is Abused for Crypto Fraud

AI has become a powerful tool in the hands of scammers, enhancing their ability to defraud cryptocurrency users. Besides deepfakes, scammers harness AI to reach more victims with convincing fake profiles.

Automating Scam Operations

AI-powered tools are enabling scammers to significantly scale up their operations. Generative AI and large language models (LLMs) can quickly create properly formatted emails that are highly convincing and contextually relevant. This allows scammers to automate the process of sending out phishing attempts, making it easier to target a large number of potential victims.

Some cybercriminals are using AI to automatically design scam website interfaces, tailored for SEO considerations. This automation makes it more efficient for scammers to cycle through multiple fraudulent sites, creating fresh marketing materials and new scams rapidly.

Creating Convincing Fake Personas

AI has revolutionised the creation of fake personas, making it challenging to distinguish between real and artificial identities. Scammers are using AI-generated images to create fake profiles, often stealing selfies from real users to appear more authentic. In one study, these AI-created profiles were found to have an average of 74 followers, 140 friends, and 149.6 tweets, making them seem like legitimate users.

Exploiting Market Trends

AI helps scammers capitalise on market trends and hype. For example, numerous tokens with variants of ‘GPT’ in their names have appeared on several blockchains, attempting to exploit the AI hype. Scammers use AI to generate buzz and manipulate market sentiment around these tokens.

AI-powered trading bots are also being misused. While legitimate bots can analyse market trends and execute trades autonomously, scammers can exploit this technology to manipulate markets through coordinated ‘pump-and-dump’ schemes fed into scam bots that recommend and execute the trades.

Red Flags to Watch Out For

Below are three red flags that come with many crypto scams:

Unrealistic Promises

Be cautious of AI-powered crypto scams that promise guaranteed high returns with little or no risk. These claims are often too good to be true and are classic warning signs of fraud. 

Legitimate cryptocurrencies don’t guarantee profits or promise free money. Scammers also may use AI to create convincing marketing materials or generate fake testimonials from happy traders. Remember, all trading carries some level of risk, and no one can guarantee constant profits.

Pressure to Act Quickly

Fraudsters often use high-pressure tactics to create a sense of urgency, pressuring individuals to make hasty decisions without proper research. 

They might claim that an offer is time-limited or that action is needed now to avoid missing out. AI-powered bots can be programmed to send multiple messages or make repeated calls, adding to this pressure. Take time to perform proper research — and never trade under pressure.

Requests for Sensitive Information

Be wary of unsolicited requests for sensitive information, such as crypto wallet details or banking information. AI-powered phishing attacks can create convincing lure sites that mimic legitimate cryptocurrency platforms. 

These sites often claim to offer advice and tutorials for various crypto products but are designed to steal the user’s information. Users should never share their cryptocurrency private keys — they control crypto and wallet access, and no one needs them for a legitimate cryptocurrency transaction.

Remember, AI scammers can use voice-cloning technology to impersonate friends or family members in distress, seeking to stir up a user’s emotions and trick them into transferring money or sharing sensitive information. Always independently verify any urgent requests by navigating to the company’s website by manually typing in the URL or calling the bank or exchange back on their official number.

How to Protect Against AI Crypto Scams

Below is how to stay safe from AI crypto scams:

Verify Sources

To protect against AI-powered crypto scams, it’s crucial to carefully verify sources. Always double-check the recipient’s address and the amount being sent before approving any transaction. 

Be wary of unsolicited messages on social media, and manually enter URLs of crypto-related websites to avoid being spoofed. Remember, legitimate cryptocurrencies have readily available disclosures with detailed information about the blockchain and associated tokens.

Here are more essential tips on how users can keep their Crypto.com account safe.

Use Security Tools

Employing security tools can significantly enhance a user’s protection against AI scams. Consider using browser extensions like Scam Sniffer, Revoke.cash, or Web3 Antivirus, which act as a protective layer against suspect transactions. Scam Sniffer is an all-in-one Web3 anti-scam solution with a Chrome extension and API. It can identify scam websites and malicious transactions in real time to protect individual users.

The Revoke.cash extension pops up whenever someone is about to sign an allowance and informs them of the details to prevent signing malicious allowances. It also warns users when listing an item for sale on marketplaces like OpenSea and LooksRare or signing a hash used by certain marketplaces. The extension works with every Ethereum Virtual Machine (EVM)-based chain, including Ethereum, Polygon, and Avalanche.

Web3 Antivirus acts as a security layer when making transactions or browsing websites. It leverages transaction simulation and proactive phishing detection to warn about risks before connecting a user’s wallet or signing anything. The extension provides security against 60-plus types of scams and immediately alerts users if heading to a phishing site.

Stay Informed

Staying informed is key to protecting against evolving AI crypto scams. Participate in cybersecurity training, keep up with the latest scam tactics, and be cautious of AI-generated phishing attacks that create convincing lure sites mimicking legitimate cryptocurrency platforms. 

Additionally, watch out for deepfake videos featuring celebrities endorsing fraudulent crypto projects, often distributed on social media platforms.

Remember, AI voice cloning can now replicate a person’s voice using as little as 3–10 seconds of audio, so be cautious of unexpected calls requesting money or sensitive information from a familiar-sounding voice.

Conclusion

The rapid evolution of AI technology has had a significant impact on the cryptocurrency landscape, introducing new challenges for users to navigate. 

As we’ve explored, AI-powered scams have become increasingly sophisticated, using deepfakes, voice cloning, and automated phishing attacks to trick unsuspecting victims. To stay safe, it’s crucial to remain vigilant, verify sources, and use security tools that can help protect against these emerging threats.

Knowledge and common sense are the best defence against AI crypto scams. By staying informed about the latest scam tactics and following the protective measures outlined in this article, users can significantly reduce their risk of falling victim to fraud. Remember, if an offer seems too good to be true, it probably is. Always take the proper time to research and make informed decisions when it comes to cryptocurrency investments.

Due Diligence and Do Your Own Research

All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, cybersecurity, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by Crypto.com to invest, buy, or sell any coins, tokens, or other crypto assets. Returns on the buying and selling of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction. Any descriptions of Crypto.com products or features are merely for illustrative purposes and do not constitute an endorsement, invitation, or solicitation.

Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.