Artificial Intelligence: A New Tool for Crypto Criminals
Artificial intelligence (AI) has the potential to create a new wave of crypto-based crime in the near future, warns blockchain intelligence platform Chainalysis. During a private video webinar, Eric Jardine, the Lead of Cybercrimes Research at Chainalysis, discussed the evolving trends in illicit blockchain activity in 2023 and predicted the tactics that criminals might adopt in the coming years.
The Impact on DeFi Security
Jardine highlighted that discussions are already taking place within the industry about how emerging technologies, particularly large language models (LLMs), could impact blockchain crime. He explained that AI models used for code audits could potentially improve the security of decentralized finance (DeFi) platforms. However, these same models could also be leveraged by malicious actors to identify vulnerabilities in smart contracts. DeFi has historically been a prime target for cryptocurrency theft due to flaws in code, exploitation of private keys, and price manipulation.
While formal audits have become standard practice in the blockchain industry, they are not foolproof against hacks. The introduction of AI adds an additional layer of uncertainty as it remains unclear whether it will strengthen smart contracts or benefit attackers more. The balance of AI’s impact on DeFi security may fluctuate over time.
In 2023, the total value of stolen DeFi funds decreased from $3.1 billion in 2022 to $1.1 billion. Similarly, the number of incidents dropped from 273 to 172.
AI and Romance Scams
Aside from its implications for DeFi security, artificial intelligence could pose significant risks for romance scams. These scams involve scammers establishing fake relationships with individuals and exploiting them for financial gain. Jardine expressed concern about how AI, with its infinite patience and creativity, could be used by illicit actors to devastating effect in romance scams.
Last year, revenue from crypto romance scams nearly doubled compared to 2022, reaching $4.6 billion. Although the total volume of scams decreased from $6.5 billion, victims often make multiple payments, resulting in an average payment size of $4,593.
Despite these concerning trends in crypto-based crime, the share of illicit activity as a proportion of all crypto transactions fell to just 0.34% in 2023.
Hot Take: The Future of Crypto Crime
As AI continues to advance and become more accessible, it is crucial for the crypto community to stay vigilant against emerging threats. Here are some key takeaways:
- The rise of AI models presents both opportunities and risks for blockchain security.
- DeFi platforms need to continuously adapt their security measures to counter evolving attack vectors.
- Increased awareness and education about romance scams can help individuals protect themselves from falling victim.
- Collaboration between industry stakeholders, law enforcement agencies, and technology experts is essential in mitigating the risks associated with AI-enabled crypto crime.
By staying informed and proactive, the crypto community can navigate the changing landscape of cybercrime and ensure the safety and integrity of blockchain technology.
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