AI-Powered Crypto Scams Surge: Cybercriminals Exploit Advanced Tech to Defraud Victims

AI Accelerates Crypto Fraud and Digital Extortion, Experts Warn

Law enforcement agencies are struggling to keep pace with cybercriminals who are increasingly weaponizing artificial intelligence (AI) to execute more convincing cryptocurrency scams, according to experts testifying before U.S. lawmakers.

At a joint hearing held on Tuesday by the Subcommittee on Border Security and Enforcement and the Subcommittee on Cybersecurity and Infrastructure Protection, witnesses highlighted a dramatic surge in AI-driven cyberattacks targeting unsuspecting victims.

AI Makes Scams More Convincing and Harder to Detect

Cynthia Kaiser, Senior Vice President at the Halcyon Ransomware Research Center, told lawmakers,

"It’s easier to lie with AI, it’s easier to make convincing emails with malicious links, it’s easier to make these deep fakes."

Ari Redbord, Global Head of Policy at TRM Labs, revealed that AI-enabled scam activity has surged by 500% over the past year.

Security experts previously told DL News that cybercriminals are increasingly using AI to identify vulnerabilities in decentralized finance (DeFi) protocols. These criminals exploit bugs that auditors may have overlooked, enabling them to launch sophisticated attacks.

AI Enables 'Economic Violence at Industrial Scale'

Megan Stifel, Chief Strategy Officer at the Institute for Security and Technology, explained how criminals use AI to analyze vast amounts of data, including a victim’s financial details, to craft hyper-personalized scams.

"They’re using that analysis capability to essentially have a response to every blockade that the victim tries to assert, making it harder for the victims to not make the payment."

Jacqueline Burns Koven, Head of Cyber Threat Intelligence at Chainalysis, noted in February that criminals are profiting by selling AI software designed to impersonate others, tricking victims into fraudulent investments.

'Threat Is Daunting' — Experts Call for Faster Action

Kaiser emphasized that AI is lowering the barrier to entry for cybercrime, allowing "a world of people who couldn’t do attacks yesterday but can today."

She warned that security teams risk burnout if they do not adopt AI-driven tools to counter these threats. Redbord agreed, stating that while the threat is severe, U.S. authorities are working to deploy advanced technologies to combat the scams.

Redbord added,

"Bad actors are always early adopters of transformative technology. We need to move as fast as those bad actors, and the tools exist today."

Proposed Legal Reforms to Combat Cybercrime

Kaiser, a former FBI agent, suggested that existing laws could be strengthened to better address the rise in cybercrime. She proposed that the Departments of State, Justice, and Treasury evaluate whether terrorism designation authorities under existing law could apply to ransomware actors who repeatedly target critical infrastructure, such as hospitals.

She clarified,

"I’m not asking for a designation today — what I’m saying is that we need honest legal analysis towards that, looking at the existing law and determining if departments believe it meets those thresholds."

Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at [email protected].