Approximately 9.9 billion dollars worth of cryptocurrency frauds were documented in the year 2024. Despite a decrease in scam-related income, Chainalysis anticipates that this figure will rise as they uncover more accounts associated with such fraudulent activities.
To top that, the rise of AI has also made scams more advanced and effective.
AI Technology Amplifies Scams
In 2024, fraudulent service providers on a peer-to-peer marketplace known as Huione, collected at least 375.9 million dollars worth of cryptocurrency for their illegal offerings.
From 2021 to 2024, the income for providers of scam infrastructure in Huione skyrocketed exponentially, and earnings for AI service providers increased an astounding 1,900%. This trend suggests a significant rise in the utilization of AI technologies, enabling scammers to falsely represent people or create convincing content to trick victims into fraudulent investment opportunities.
The capability of Generative AI holds promise for fostering genuine advancements, yet it can also empower con artists to streamline their activities more effectively and economically. An AI-enhanced fraud detection system called Alterya found that a staggering 85% of scams involve accounts that have been thoroughly verified, thereby circumventing conventional identity verifications.
With the help of this technology, scammers frequently deceive victims into authorizing payments based on misleading information – an approach referred to as authorized debit scams (ADS), as reported in a press release by Chainalysis and shared with CryptoPotato.
According to Elad Fouks, who serves as the leader of fraud products at Chainalysis and one of the founders of Alterya, he made a declaration in a statement.
GenAI is significantly increasing financial institution risks due to scams, as it provides sophisticated, affordable, and widely scalable fraud techniques that exploit human weaknesses. It empowers the fabrication of authentic-looking yet false identities, allowing con artists to pose as legitimate users and circumvent identity authentication measures.
On platforms such as Huione Assurance, a multitude of software providers offer generative AI tools, which some unscrupulous individuals might exploit for fraudulent purposes. One such provider on the platform advertised AI-facilitated “face-changing services” priced at approximately $200 in cryptocurrency.
The examination of transactions on the blockchain showed multiple payments of a similar sum, implying that the purchasers might be fraudsters who bought the software after seeing the vendor’s ads on Huione Guarantee. Moreover, the data suggests that these tech vendors could be used by scammers to perpetrate illegal activities.
Last year, Huione introduced an initiative named Xone on the blockchain, accompanied by a stablecoin called USDH that’s pegged to the U.S. dollar. These tools are marketed as being resistant to regulatory oversight and asset seizures, which suggests they aim to circumvent conventional limitations. It remains undecided if either XOC or USDH will become Huione’s main trading currency in the future.
Currently, you can obtain USDH solely via websites associated with Huione, however, a declaration made in October 2024 indicates that discussions are underway with significant exchange platforms for the future listing of USDH on popular trading sites.
Huione Vendors
In 2024, Chainalysis examined connections within the Huione platform regarding transactions between legitimate vendors and suspected fraudulent activities. Their study revealed a total of 2,345 exchanges, involving scammers, infrastructure service providers, social media handling firms, AI solution suppliers, as well as data distributors.
The categories of vendors that saw the highest volume of financial exchanges were infrastructure providers and social media management services, frequently transferring funds between each other. Fraudulent activities exhibited a moderate level of activity, predominantly paying for social media management services, while data vendors and AI service providers had minimal interactions and transactions with other parties.
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2025-02-13 17:12