At least $9.9 billion in cryptocurrency scams were recorded on-chain in 2024. Although scam-related revenue has dropped, Chainalysis expects it to climb as more scam-related addresses are discovered.
To top that, the rise of AI has also made scams more advanced and effective.
AI Technology Amplifies Scams
The scam technology vendors of the P2P marketplace offering various illicit services, Huione, received a minimum of $375.9 million in cryptocurrency in 2024.
Between 2021 and 2024, Huione’s scam infrastructure providers saw exponential revenue growth, while AI service vendors’ earnings surged by 1,900%. This reflects the booming use of AI tools that allow scammers to impersonate individuals or craft realistic content to deceive victims into fraudulent investment schemes.
Generative AI has the potential to drive legitimate innovation but also enables scammers to scale their operations more efficiently and at a lower cost. AI-powered fraud detection solution Alterya discovered that 85% of scams involve fully verified accounts that bypass traditional identity checks.
Using this technology, fraudsters often trick victims into approving payments under false pretenses, a tactic known as authorized push payment (APP) fraud, according to Chainalysis’ press release shared with CryptoPotato.
In a statement, Elad Fouks, head of fraud products at Chainalysis and co-founder of Alterya, stated,
“GenAI is amplifying scams, the leading threat to financial institutions, by enabling high-fidelity, low-cost, and highly scalable fraud that exploits human vulnerabilities. It facilitates the creation of synthetic and fake identities, allowing fraudsters to impersonate real users and bypass identity verification controls.”
Platforms like Huione Guarantee, host numerous software vendors supplying generative AI tools for scams. One vendor on the platform promoted AI-based “face-changing services” priced at $200 in cryptocurrency.
On-chain analysis also revealed several payments matching this amount, suggesting the buyers are likely scammers purchasing the software after encountering the vendor’s advertisements on Huione Guarantee. Data also indicates that scammers are utilizing these technology vendors to carry out fraudulent activities.
Huione debuted a blockchain initiative called Xone last year, along with a USD-pegged stablecoin known as “USDH.” These tools are promoted as resistant to regulatory control and asset freezes, likely intended to bypass traditional restrictions. Whether XOC or USDH will emerge as Huione’s primary trading currency is yet to be determined.
For now, USDH is only accessible through Huione-affiliated sites, but an October 2024 announcement confirmed ongoing talks with major exchanges to list USDH on widely used trading platforms.
Huione Vendors
Chainalysis’ analysis of on-chain interactions in 2024 among vendors and scams on the Huione platform uncovered 2,345 transfers between scams, infrastructure providers, social media management services, AI vendors, and data vendors.
Two vendor types – infrastructure providers and social media management services – had the most transaction activity, often sending funds to one another. Scams showed moderate activity, primarily paying for social media management services, while data vendors and AI service vendors had the least interactions and transactions with other entities.
Read the full article here