Cybercriminals Using AI Deepfake Tool To Evade Crypto Exchange Security, Report Warns

An artificial intelligence-powered deepfake tool is being used by hackers to exploit bitcoin exchanges, according to a recent investigation by Cato Networks. This application circumvents the identity verification processes of various sites, allowing fraudsters to create bogus accounts for illicit behavior. It is being peddled on black marketplaces.

Exploiting Identity Verification

This tool creates new, fraudulent accounts, as opposed to conventional hacks that try to access active accounts. These fictitious profiles are made by criminals to aid in money laundering and other illegal activities. “Creating verified but synthetic accounts enables money laundering operations, mule accounts, and other forms of fraud,” according to Cato Networks. The American Association of Retired Persons (AARP) reports that new account fraud increased to $5.3 billion in 2023 from $3.9 billion the year before.

The process begins with the creation of fake credentials and images through AI-rendering websites. Criminals then use the deepfake tool to forge passports and produce videos that can trick facial recognition systems used by crypto exchanges. “He is then asked to open his computer’s camera to perform facial recognition. Instead of that, the tool allows him to connect the video he created as if it is the camera’s input,” according to the report.

Raising Security Concerns

The firm showcased a video demonstrating how quickly a verified level one account was created using the deepfake tool. With just a few steps, cybercriminals can upload fake government IDs and pass facial recognition systems in a matter of minutes.

In response to this growing threat, Cato Networks advises crypto exchanges to strengthen their security systems to combat fraud. The firm noted, “AI is heavily hyped in the media, but threat actors have been perfecting their use of deepfake technologies for quite some time.” To stay ahead of these attacks, Cato CTRL recommends that organizations gather threat intelligence from various sources and keep updated on the latest cybercrime tactics.