The Rise of AI Will Increase the Number of Crypto Scams

Experts do not consider the possibility that AI could actually have the opposite effect. Meta recently warned that hackers are using OpenAI’s ChatGPT to gain access to Facebook accounts.

Meta reported the blocking of over 1,000 malicious links masquerading as ChatGPT extensions in March and April alone. Scammers dubbed the platform “the new cryptocurrency” when they called ChatGPT. Searching for the keywords “ChatGPT” or “OpenAI” on DEXTools (an interactive crypto trading platform that tracks a range of tokens) reveals a total of 700 trading pairs of tokens using either keyword. The scammers are taking advantage of the hype surrounding the AI token creation tool. OpenAI has not announced an official entry into the blockchain.

Scam coins are now promoted online via social media platforms. Scammers use the wide reach and influence of social media platforms to quickly build a large following. They can increase their reach by using AI-powered tools and build a following of thousands. These fake accounts and interactions are used to create the illusion of popularity and credibility for their scam projects.

Social Proof of Work is an important part of crypto. That said, if you see a cryptocurrency with a lot of followers, it’s probably popular for a good reason. Investors and buyers are more likely to invest in projects that have a larger and more loyal online following, assuming others have done sufficient research before investing. However, AI can undermine this social proof of work and challenge adoption.

Just because something gets thousands of likes or authentic-looking comments doesn’t mean it’s a legitimate project. AI will create many more attack vectors. An example of this is the “pig slaughter scam,” where an AI instance spends days befriending a person, typically an elderly or vulnerable person, before cheating on them. Fraudsters can use AI technology to automate and scale fraud activities.

Scammers can use AI-powered virtual assistants, chatbots, or bots to interact with individuals, offer investment advice, promote fake coins and tokens, or showcase high-yield investments. AI scams are also dangerous as they can perfectly mimic human conversations. They can even stage pump-and-dump schemes, artificially inflating the value of the tokens and then selling them for a significant profit.

Investors are cautioned about deepfake cryptocurrency scams. These scams use AI technology to create highly realistic online content. They swap faces in photos and videos, or change the tone to make it appear that well-known celebrities or influencers are supporting scam projects.

A video featuring former FTX CEO Sam Bankman Fried directing users to a malicious website promising them a doubling of their cryptocurrency was one of the most well-known deepfakes affecting the crypto industry.

In March 2023, a so-called AI project called Harvest Keeper wrested about $1 million from its users. Around the same time, projects calling themselves “CryptoGPT” began popping up on Twitter.

AI can also automate boring and monotonous aspects of crypto development, making it a useful tool for blockchain specialists. AI can be used to automate tasks required for each project, such as setting up Solidity environments and generating code. The barrier to entry into the crypto industry is expected to be significantly lowered. It then depends more on the usefulness of an idea than on the skills of the developer.

In certain niche cases, AI could democratize processes that we assume are exclusive to an elite class – in this case, experienced developers. However, since everyone has access to advanced crypto development tools and launchpads, the sky is the limit. AI makes it easier for scammers to take advantage of people. Users must be careful and do their due diligence before investing in any project.

This article is provided for general information and does not constitute investment or legal advice. The views, opinions and thoughts of the author are their own and do not necessarily reflect those of AskFX.