Crypto scammers stole approximately $9.9 billion from the industry in 2024, marking the lowest theft since 2021, according to a recent Chainalysis report. However, the firm projects that the figure could rise to $12.4 billion as more fraudulent addresses are identified.
The report highlights how artificial intelligence (AI) has fueled a new wave of crypto fraud, making scams more sophisticated, scalable, and harder to detect. Fraudulent actors are leveraging AI-generated identities, deepfake technology, and automated verification tools to exploit unsuspecting victims.
AI Supercharging Crypto Fraud
The advent of generative AI has significantly reduced the barriers for scammers, enabling them to craft compelling synthetic identities, fake investment schemes, and deepfake-driven scams with ease. Chainalysis revealed that 85% of scams involve fully verified accounts that bypass traditional identity verification systems.
Elad Fouks, head of fraud products at Chainalysis, emphasized AI’s role in scaling fraudulent operations:
“GenAI is amplifying scams by making fraud more scalable, cost-effective, and harder to detect. It allows criminals to impersonate real users, generate fake content, and orchestrate elaborate investment scams.”
One of the most concerning developments is the rise of Huione Guarantee, a peer-to-peer black-market hub facilitating AI-driven scams. The platform provides illicit services such as AI-generated identities, deepfake voice technology, and synthetic verification tools. On-chain data suggests that payments to Huione’s AI software vendors spike shortly before major scam operations, indicating that fraudsters reinvest stolen funds into AI tools to refine future schemes.
The Rise of Pig Butchering and HYIS Scams
Among various fraudulent schemes, high-yield investment scams (HYIS) and pig butchering scams dominated illicit crypto flows, accounting for 50.2% and 33.2% of scam revenue, respectively. While HYIS scams saw a 36.6% decline in inflows compared to the previous year, pig butchering scams surged by nearly 40%.
Pig butchering scams, which originated in large scam compounds in Southeast Asia, have expanded globally. These operations lure victims into investing in fake crypto schemes, gradually convincing them to allocate more funds before stealing everything.
In December 2024, Nigerian authorities arrested 48 Chinese and 40 Filipino nationals for orchestrating a crypto investment scam targeting victims in Europe and the Americas. Meanwhile, Interpol disrupted scam networks worldwide, including a case in Namibia where 88 trafficked youths were forced into crypto fraud schemes.
Evolving Scams and Regulatory Challenges
Fraudsters are constantly refining their tactics, shifting from long-term investment scams to quicker job fraud schemes where victims unknowingly send crypto deposits disguised as job application fees.
“These scams are particularly insidious because they prey on job seekers, especially those desperate for work,” said Eric Heintz, a global analyst at the International Justice Mission (IJM).
In a bid to strengthen its financial infrastructure, Huione launched its own blockchain project, Xone, alongside a stablecoin, USDH, designed to evade regulatory oversight and asset seizures. The move highlights the increasing sophistication of fraud networks and the difficulty authorities face in cracking down on illicit financial flows. Despite intensified enforcement efforts by global regulators and law enforcement agencies, AI-powered scams continue to evolve rapidly. The reliance on AI suggests that traditional regulatory tools may be insufficient in combating the growing fraud epidemic. As authorities race to contain the crisis, new strategies and advanced countermeasures will be essential to curb the rise of AI-driven crypto scams.
