AI is Making Crypto Scammers Smarter

In recent years, the fusion of artificial intelligence (AI) and cryptocurrency has driven innovation and provided new avenues for cybercriminals. A notable concern is the emergence of “pig butchering” scams, which have seen a significant increase in sophistication and frequency.

Understanding Pig Butchering Scams

Pig butchering or “Shā Zhū Pán,” originates from Southeast Asia, and refers to a deceptive scheme where scammers cultivate trust with victims over time, akin to fattening a pig before slaughter. Initially, these fraudsters establish relationships, often through social media or dating platforms, engaging in prolonged interactions to build rapport. Once trust is secured, they introduce fraudulent investment opportunities, typically in cryptocurrency, convincing victims to invest substantial sums.

Cryptocurrency fraud is on the rise, and one of the most sophisticated and damaging forms of it is pig butchering — TRMLabs.

In 2024, such scams accounted for approximately 33.2% of all crypto scam revenue, marking a nearly 40% year-over-year increase.

The Role of AI in Modern Scams

Artificial intelligence has become a pivotal tool for scammers, enhancing the believability and reach of their fraudulent activities. Generative AI, a subset of AI that can produce content such as text, images, or videos, is particularly exploited. For instance, AI-driven “face-changing services” allow scammers to alter their appearance in real time during video calls, making impersonations more convincing. Such services are readily available on illicit marketplaces like Huione Guarantee, with prices around $200 in cryptocurrency.

The Rising Threat

Chainalysis’ report shows that scammers integrating AI into their fraudulent strategies has led to a staggering 1,900% increase in revenue for sellers of AI scam services since 2021, reaching $18 million in the past year. This surge underscores the growing accessibility and appeal of AI tools among cybercriminals. The adaptability of AI allows scammers to craft more personalized and convincing narratives, making it increasingly challenging for individuals to discern genuine interactions from fraudulent ones.

The potential of AI technology to exponentially scale crypto scams will further add to the challenges associated with combating these crimes — Jacqueline Burns Koven, Head of Cyber Threat Intelligence at Chainalysis.

Case in Point

In December 2024, Scott Simmons, a Wisconsin detective, assisted a victim who lost $551,000 to a pig butchering scam. It began with social media messages that evolved into a seemingly genuine relationship. The scammers eventually introduced the victim to what appeared to be a legitimate cryptocurrency platform, displaying fake account screenshots that showed growing profits.

Trusting the illusion, the victim initially transferred small amounts before sending larger sums, ultimately making 15 transactions in USD Coin. The deception unravelled only when they attempted to withdraw their supposed profits, realizing they had been scammed.

Mitigation and Awareness

As AI-driven scams become more prevalent, individuals must exercise caution, especially when approached with unsolicited investment opportunities. Verifying the authenticity of such offers and being aware of the potential for AI-enhanced deception are crucial steps in safeguarding against these sophisticated scams. Organizations and individuals alike must stay informed about the evolving tactics employed by scammers to effectively protect themselves in this digital age.

AI is Making Crypto Scammers Smarter was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.