Nearly $80B lost to fraud since 2022 — Bitget’s research report

Use of the deepfake technology by cryptocurrency fraudsters increased by 245% in 2024, compared to the previous year. In the first quarter of this year, more than $2 billion were stolen using such methods. Bitget, the world’s leading cryptocurrency exchange and web3 company, has made a recent research report about methods of operation and how to counter them. AIN shares the key notes.

Using deepfake technology by online fraudsters

As technology progresses, so does the toolkit of online fraudsters, who are harnessing more sophisticated methods for illicit activities. Artificial intelligence plays a crucial role, with fraudsters use technologies such as behavior pattern recognition, voice modification, and face-swapping machine learning algorithms. These AI tools enable criminals to impersonate others and steal identities effectively.

There has been a significant rise in the use of deepfake technology in cryptocurrency-related crimes, with a reported 245% increase in 2024 compared to the previous year. Bitget Research also predicts that by 2026, nearly 70% of fraudulent activities will involve deepfake technology.

The impact of deepfakes on the crypto space

Since the beginning of 2022, losses from fraudulent operations involving cryptocurrencies have reached $79.1 billion. The yearly dynamics from 2022 to 2023 reveals a general downward trend in these losses.

Constantly observing and monitoring the cryptocurrency industry, we see the growing use of deepfake technology for criminal purposes. Stopping this trend is extremely challenging, so the key elements are not only implementing detailed legal regulations and developing security technologies offered by exchanges, but also educating and raising user awareness to help them identify fraud attempts,

Gracy Chen, CEO of Bitget, commented.

The global trend of a 245% increase in the number of deepfakes compared to 2023 has also significantly impacted the cryptocurrency sector, affecting the security of victims’ accounts. The surge in fraudulent transactions and financial losses suggests that quarterly losses could increase to an average of $10 billion by early 2025. Assuming this trend persists over the next three quarters, it could lead to an annual total of $25.13 billion in 2024.

Structure of crimes involving deepfakes:

According to the report, the most commonly used types of deepfakes in the cryptocurrency world are:

  • Identity theft and impersonation;
  • Deepfake-generated fake IDs for bot networks;
  • Scams and fraudulent schemes;
  • Market manipulation;
  • Investment fraud;
  • Ransom and extortion;
  • Regulatory evasion and compliance violations;
  • Social engineering attacks;
  • Technology exploitation;
  • Public deception and misinformation;
  • Automated trading manipulation;
  • Credential stuffing and account takeover;
  • Cryptojacking;
  • Fake legal or regulatory announcements;
  • Crowdsourced attacks;
  • Illicit fundraising;
  • Impersonation in virtual reality and metaverse;
  • Fake arbitration;
  • Black market transactions.

Similar to 2022, losses from scams, fraud, and deception continue to dominate, although their share has decreased from 57.91% to 53.32% by Q1 2024. These illicit activities encompass the creation of fake projects, phishing attacks, and Ponzi schemes. The prominence of this category is not due to the sheer number of schemes but rather their global reach and their capacity to target thousands of victims simultaneously.

The largest subset of fake news crimes in terms of losses encompasses scams, illegal fundraising, sham arbitration, social engineering attacks, disinformation, and fake announcements. Without adequate countermeasures, 2024 may witness a new record for deepfake-enabled fraud, potentially surpassing the combined losses of 2022 and 2023.