$4.6 Billion Wasted on Crypto Scams Fueled by AI Deepfakes, According to Report

A recent study, conducted in collaboration between Bitget, SlowMist, and Elliptic, indicates that scams accounted for losses exceeding $4.6 billion in 2024, marking a 24% rise from the year prior.

Among the primary threats impacting users are deepfake AI impersonation, social engineering schemes, and contemporary Ponzi schemes.

Frequent Fraudulent Activities

The findings highlight that almost 40% of significant fraud cases in 2024 involved the use of deepfake technology. Scammers have been creating realistic videos of well-known individuals, including the owner of platform X, Elon Musk, to promote fraudulent investment opportunities on social media. A notable incident involved the Hong Kong police apprehending 31 individuals from a syndicate that utilized AI-generated videos of various cryptocurrency leaders to swindle $34 million.

Furthermore, the research shows that malicious actors are leveraging AI to circumvent Know Your Customer (KYC) protocols, fabricate customer service interactions, and mimic platform interfaces to create an illusion of legitimacy. Scammers have even manipulated Zoom calls, sending deceptive invitations containing links to harmful software.

Social engineering continues to pose a threat by capitalizing on human psychological weaknesses. This is evident in AI-driven arbitrage scams that suggest effortless profits through ChatGPT-generated programming while guiding users to engage with fake platforms that pilfer their assets. Other prevalent tactics include job offers laced with Trojans, phishing links sent via direct messages and tweets, and address poisoning schemes.

Moreover, modern Ponzi schemes have adapted to disguise themselves as credible decentralized finance (DeFi), NFT, and GameFi ventures. The report pointed to the 2023 JPEX case in Hong Kong, where the platform claimed to be a “global cryptocurrency exchange,” promoting its native JPC token which promised “high and stable returns” through physical advertising and celebrity endorsements.

However, lacking regulatory authorization, the platform was deemed “highly suspicious” by authorities. A subsequent investigation uncovered over $213 million in losses stemming from more than 2,600 complaints from disgruntled users.

Previously, blockchain analyst ZachXBT brought attention to a fraudulent network connected to various rug pulls, including Leaper Finance and Zebra Lending. These operations employ forged KYC documents and counterfeit audit reports to attract users before illicitly siphoning funds once their bogus tokens artificially inflate in value.

Bitget points out that contemporary digital frauds vary significantly from older Ponzi schemes due to their incorporation of more complex methods. These include advanced “social fission” strategies that utilize messaging platforms and live streams for user recruitment, along with gamified interfaces and fabricated identities.

Anti-Fraud Measures

In response to the escalating dangers posed by scammers, Bitget, SlowMist, and Elliptic have unveiled the Anti-Scam Hub initiative. This effort aims to trace illegal proceeds, dismantle phishing operations, and detect deceptive practices across blockchain networks.

“Criminals are continually adapting their attack strategies, employing AI and discovering innovative ways to expand their operations,” stated Arda Akartuna, Lead Crypto Threat Researcher at Elliptic. “We are equally committed to enhancing our technology and blockchain capabilities to track and identify the evolving tactics used by criminals.”

A risk mitigation fund exceeding $300 million is also being established to protect users.