Dubai: Cryptocurrency scams are nothing new, and scammers are constantly finding new ways to deceive investors. With the recent Artificial Intelligence (AI) boom, scammers have now started to use the trending technology in several unique ways to steal your cryptocurrencies.
This includes using ‘deepfakes’, which are AI-generated hoax images or videos of people, as well as promoting popular AI buzz words, all to market their products and dupe potential victims into investing in them, according to global blockchain analytics platform Elliptic’s latest report.
“Investors and new buyers tend to trust cryptocurrencies with greater and more loyal followings online, assuming that others have done enough research prior to investing. However, the use of AI can challenge this assumption,” said Akhbar Kharbekh, a Dubai-based cryptocurrency analyst.
“By using deepfakes of major crypto influencers and celebrities such as Elon Musk, world leaders, and even crypto exchange employees, for endorsements, and using industry-specific buzz words such as GPT to push dubious crypto tokens, a false sense of trust is built among users to part with their money.”
Also, when searching keywords ‘ChatGPT’ or ‘OpenAI’ on DEXTools, a crypto trading platform tracking tokens, over 700 tokens mention either of the two keywords, indicating scammers are using the hype around the AI tool to create tokens, given that OpenAI has not made any crypto entry yet.
“Now, just because something has thousands of likes and genuine-looking comments does not necessarily mean it is a legitimate project. This is just one attack vector, and AI will give rise to many others. This is why it’s now more crucial than ever to know how to protect your investments,” added Kharbekh.
Several other reports and surveys indicate that a lot of crypto-targeted attacks are ‘social engineering’ attacks; a manipulation tactic wherein users are asked to access a website, a website asks them to connect their wallet, or a transaction pops-up. When a crypto user approves it, their money is gone.
Kharbekh agreed that crypto scammers still commonly rely on ‘social engineering’ – which, in this case, involves getting crypto users to reveal their private keys. Other attacks only require knowing a crypto user’s wallet address – which is oftentimes the only way to steal crypto.”
How do you spot cryptocurrency scams before they happen?
There are certain warning signs to look out for when deciding whether or not you should pursue plans to invest in a certain cryptocurrency, and protect your investments from being targeted in a scam.
1. When a cryptocurrency’s whitepaper is non-existent
Every cryptocurrency should have a whitepaper since this is one of the most critical aspects of an initial coin offering, which is a type of crowdfunding by which funds are raised for a new cryptocurrency venture.
“The whitepaper should explain how the cryptocurrency has been designed and how it will work. If the whitepaper doesn’t make sense – or worse, doesn’t exist – then tread carefully,” said Brody Dunn, an investment manager at a UAE-based asset advisory firm.
2. Lack of relevant background info on a cryptocurrency
For most investment businesses, it should be possible to find out who the key people behind it are. Usually, this means easy-to-find biographies of the people who run the investment plus an active presence on social media.
“If you can’t find out who is running a cryptocurrency, be cautious. Also, keep in mind that no investment can guarantee future returns because investments can go down as well as up. Any cryptocurrency offering that promises you that it will definitely make money is a red flag,” Dunn added.
How can you protect your crypto wallet from scammers?
With over 420 million crypto users worldwide, crypto wallets are becoming increasingly popular among crypto enthusiasts to hold their private keys securely. But how would you go about keeping your cryptocurrencies safe in your wallet.
“If a firm asks you to share your keys to participate in an investment opportunity, it’s highly likely to be a scam,” cautioned Kharbekh. “Keep your wallet keys private. Also, scammers often use high-pressure tactics to get you to invest your money quickly.”
“This involves promising discounts if you participate straightaway, aiming to reach as many people as possible in the shortest time possible – to raise money fast. If you feel the marketing for a crypto offering seems heavy-handed or makes claims without backing them up, do further research.”
While the best way to protect yourself from an attack targeting your cryptocurrencies is to be aware of the risks and take measures to protect your wallet, there are a few quick go-to tips to help you stay safe when trading crypto:
1. Use a secure wallet: Protect yourself from such attacks by using a wallet that is secure and encrypted. A hardware wallet is the most secure, as it stores your private keys offline.
2. Don’t share your wallet address: Avoid sharing your wallet address with anyone, as this could lead to investors becoming a potential victim of fraudulent crypto transactions.
3. Use two-factor authentication: Setting up two-factor authentication for your wallet will make it more difficult for hackers to access your funds, even if they could.
Bottom line?
On a more positive note, AI also has the potential to automate the aspects of crypto development and act as a great tool for those using the technology that runs cryptocurrencies. However, with the risk of it being used as a tool to scam investors, you need to keep your cryptocurrencies safe.
“With hackers and scammers getting ever more industrious, it’s important to always pay attention to the addresses your wallet interacts with. Ideally, wallets need to have security features like two-factor authentication built in, and a lot of them do, so use those that do,” added Dunn.
“Awareness of these new (or frankly, old, but now supercharged) scams means that users can stay ahead of the curve. That means crypto users should become more familiar with the most common types of crypto-related scams.”
Kharbekh added that certain crypto software have also started to use AI to fight such hacking attempts, with detection bots and machine learning models used to monitor transactions in real time and look for specific red flags in a new cryptocurrency’s algorithm.
Both the experts also recommended that newbie crypto investors must make use of crypto storages that are offline, as it is widely regarded as the safest option and is used both by individuals and exchange platforms to secure their digital assets.
