- Hackers stole over $2B in crypto hacks in 2024, with half attributed to private key exploits.
- A new AI deepfake tool has appeared, and it can bypass most KYC measures on crypto exchanges.
- London police are cracking down on illegal ATM businesses, and the FBI has created a fake coin to catch pump-and-dump schemes.
- The FBI managed to catch three ‘market makers’ and nine people who were skewing public perception about the fake coin.
Hackers stole and strong-armed over $2B in crypto in 2024. Now, a new AI deepfake tool allows scammers to bypass any know-your-customer (KYC) measure on exchanges.
And the FBI has created a fake coin to trap pump-and-dump scammers. Did it work? Indeed, they caught some big fish.
Plus, London is cracking down on crypto ATM operators.
It seems that while crypto scams are at an all-time high, the authorities are also fighting back, and they’re playing it smarter.
Let’s see what’s been happening.
More Sophisticated Crypto Hacks Over $2B, But Adoption Grows
According to a report, scammers looted $1.9B in the first six months of this year, with only $188M recovered. And hacks were the biggest contributor – $1B.
Specifically, private key exploits through social engineering (hackers manipulating you to hand over your keys).
Phishing accounted for $409M in losses and scams for $524M. And only $188M was successfully recovered, which puts the total loss to just around $1.8B.
At the same time, a new AI deepfake tool has appeared, and it’s ‘a new level of sophistication,’ according to cybersecurity firm Cato.
Dubbed ProKYC, this is what the tool can do:
- Create a new virtual identity on the fly
- Generate fake documents and deepfake videos
The result? A near-indistinguishable method to bypass KYC steps on crypto exchanges. The tool can integrate AI-generated faces into things like passports and national IDs.
The solution? Increasing KYC strictness. However, Etay Maor (Cato Networks’ chief security strategist) said that could lead to many false-positive alerts.
A September report by Gen Digital (a software firm) shows that scam deepfake AI videos have significantly increased in number in the last ten months.
Despite this, crypto’s popularity is skyrocketing. There are 24.34% more crypto investors than in 2023 (670.5M to 833.7M). And by 2028, we could have 992.5M users, according to Social Capital Markets.
As all this is happening, London police and the FBI are fighting tooth and nail against crypto scammers at every opportunity.
UK Police Tracks Illegal Crypto ATMs & The FBI Creates Fake Coin
Habibur Rahman, accused of running an illegal crypto ATM in the UK, pleaded not guilty. He’s the first UK citizen charged with this offense after reportedly laundering £300K ($391,551) in crypto.
In September, the Financial Conduct Authority (FCA) sentenced another person for running multiple illegal ATMs and laundering $3.4M in crypto transactions.
At the same time, the FBI is taking out the big guns – they’ve created a fake coin to lure pump-and-dump schemes. And they succeeded.
NexFundAI (the coin in question) helped the SEC charge three ‘market makers’ and nine people who wash traded the coin, manufacturing a trading market where there was none.
Here’s what the FBI had to say about it.
What the FBI uncovered in this case is essentially a new twist to old-school financial crime. What we uncovered has resulted in charges against the leadership of four cryptocurrency companies, and four crypto ‘market makers’ and their employees who are accused of spearheading a sophisticated trading scheme that allegedly bilked honest investors out of millions of dollars.Jodi Cohnen, special FBI agent
One of the market makers working for MyTrade MM told the NexFundAI ‘promoters’ that MyTrade MM could ‘control the pump and dump’ and ‘do inside trading easily.’
The FBI disabled trading on the token, but only after getting $25M from ‘fraudulent proceeds,’ which will be returned to the investors.
Looking Ahead – Crypto Scammers and FBI in Eternal Battle
It seems that the authorities never tire of fighting crypto scams. But can they keep pace with the alarming increase in sophistication?
ProKYC could be just the beginning of a long series of highly sophisticated scamming tools. Will the FBI adapt, and are investors in more danger?
That remains to be seen, though it’s not looking good.
References
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