AI crypto fraud activity has jumped by 500% over the past year, according to a recent report from TRM Labs.
The report added that artificial intelligence greatly boosts the scale and speed of crypto hacks. This indicates the fast use of generative AI in fraud, such as phishing, identity theft, and money laundering.
AI boosts social engineering scams and automated fraud in crypto
Before the release of AI models, large crypto scams relied on human labor, like call centers and trained operators. But now, AI has removed many of these limits.
The report explained that AI helps hackers automate, customize, and expand crypto crimes. It added that threat actors use generative AI to quickly write and design phishing emails and fake investment websites, and even to create realistic chatbots.
Large language models, or LLMs, help scammers create personalized messages with a higher chance of engagement. Moreover, AI translation tools help fraudsters localize scams across languages and regions.
The report added that deepfake audio and video speed up impersonation. Criminals use this technology to “mimic executives, romantic partners, or public figures with increasing realism.”
AI aids scammers in building trust with their victims. It creates convincing stories and handles hundreds of conversations from victims at once. AI essentially sped up and eased Pig butchering and romance scams.
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TRM also explained that machine learning tools can test stolen usernames and passwords in bulk. It can go through seed phrases and private keys and steal funds within seconds. Moreover, machine learning can identify weaknesses in smart contracts and help hackers quickly attack entire blockchain protocols.
“Artificial intelligence does not merely increase outreach volume; it accelerates the entire fraud lifecycle,” stated the report.
Last month, a crypto whale lost 1,459 BTC and 2.05 million LTC after falling victim to a social engineering scam. The scammers deceived the victim into approving fraudulent transactions, accessed his hardware wallet, and looted a whopping $282 million.
In 2024, an employee of a British engineering firm fell victim to a deepfake scam and transferred around $26 million to Hong Kong bank accounts.
Two days ago, US Federal agents in North Carolina seized over $61 million in Tether’s USDT. Investigators found that the seized money came from crypto wallets linked to laundering stolen funds from pig butchering schemes.
Last year, illicit crypto transactions reached a record volume of $158 billion. This is a rise of about 145% from the previous year. Around $30 billion of the total losses resulted from scams, according to TRM Labs.
The rise in AI crypto fraud isn’t surprising. Vectra AI stated that AI scams jumped by 1,210%. The firm expects to hit $40 billion by next year.
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Chainalysis echoed TRM Labs’s finding in a recent X post. The blockchain analysis firm stated, “AI‑enabled scams pulled in 4.5× more revenue per operation and generated 9× more daily transactions than non‑AI scams.”
The firm reiterated that combating AI-driven crypto scams requires defenders to adopt similar tools, stating that “if bad actors are using AI, defenders should too.”