Over the last few months, scammers have been using deepfakes to trick investors and traders. This is a notorious exploit that’s pretty hard to spot and has caused massive losses of late. But what are deepfakes and how do crypto scammers use them to exploit market participants? Tag along to find out.
The cryptoverse has been ravaged by hackers and scammers throughout 2022. In fact, more than $4.3 billion was stolen by these bad actors between Jan and November last year. What’s worse is that, as hackers gain more knowledge, they come up with new and diverse ways to syphon funds from unsuspecting individuals.
For instance, over the last few months, scammers have been using deepfakes to trick investors and traders. This is a notorious exploit that’s pretty hard to spot and has caused massive losses of late. But what are deepfakes and how do crypto scammers use them to exploit market participants? Tag along to find out.
What is a deepfake scam?
Deepfake technology is powered by Artificial Intelligence (AI) that can generate hyperreal images and videos. It is often used to create videos of people saying and doing things that they never have done in reality.
To achieve this, Machine Language (ML) algorithms are deployed that can analyze and mimic the verbal tone, facial expressions, and mannerisms of any given individual. Initially, it was created for fun and games online and was primarily used in the entertainment industry and social media memes. However, gradually its implications have become complex as malicious entities would use this powerful technology to spread misinformation, create fake news, and steal identities by impersonating someone.
How do scammers use deepfakes in the crypto world?
In the crypto world, scammers have been using deepfake technology to imitate popular figures and celebrities. With the right tools, they can create a fake video of any well-known figure from the cryptoverse. Hackers use this technology and impersonate some big names who are related to the world of crypto and spread misinformation, promote false crypto projects, etc.
People who are unaware of such technologies may easily fall prey to these scams. They may even give up their private keys to malicious entities thinking they are handing over the credentials to some trustworthy industry expert. And once these hackers or scammers gain access to the wallets, they siphon off all the stored assets.
Or in some cases, hackers spread misinformation about a random contest or ask users to invest a particular amount for a reward. They create a sense of urgency for the investments by providing a deadline and making the users believe in the credibility of that offer. Users who are not acquainted with such scams often invest in digital assets or even fiat money, and once the deadline is reached, the hacker closes the portal and disappears without a trace.
Examples of Deepfake scams in the crypto industry
In August 2022, Patrick Hillman, the chief communications officer of Binance, stated that hackers created a deep fake of him and used it to set up fake meetings with several of his contacts. The exploit surfaced after several of Hillman’s contacts began thanking him for setting up these meetups. One contact even shared a screenshot of the alleged Zoom call with the deep fake.
Fortunately, no losses were reported from the incident as Hillman was quick to bring it to the attention of general audiences.
Earlier in May 2022, hackers created a deep fake of Elon Musk to coerce users into investing in a phoney crypto exchange called ‘BitVex’. The deep fake video promised users “30% dividends every day for the rest of their life.” However, the deep fake wasn’t very convincing as Musk’s voice was quite robotic and it did not sync well with his lip movements.
Most recently, hackers used deep fake technology to modify an older interview of Sam Bankman-Fried, the ex-CEO of the now-bankrupt FTX cryptocurrency exchange. In the fake video, hackers made it look like SBF was promoting some sort of compensation scheme where users affected by the FTX collapse could get some of their funds back.
The video instructs affected users to visit ‘ftxcompensation.com’ and send any amount of crypto to a wallet address mentioned there. In return, the wallet address would send back double the amount. This is a very common scheme and scammers just pocket the tokens after you send them.
How will you identify a deepfake crypto scam?
According to David Schwed, Chief Operating Officer of Halborn, a blockchain security firm, whenever such videos come up, you should take a good look at the subject’s eyes. Since these videos are compiled from a bunch of photographs and videos, creating a perfect set of human eyes which blink naturally while speaking, is difficult and often falls into what the VFX artists call, “the uncanny valley.”
Another way is to directly engage in a quick conversation with the subject and ask questions, the answers to which only the ‘real’ subject will know of. Also, look for any inconsistencies, blemishes, blurs, mismatched lighting, etc. in the video. These are clear giveaways that the video has been morphed. Audio is also very important. Poorly done videos will sound robotic and are a big red flag.
But most importantly, never share your crypto credentials with anyone, even if it is a renowned figure in the digital asset industry. Also, do not blindly invest in a project, especially at the behest of others. Always do your own research before putting your head-earned money on the line.
The crypto space is filled with bad actors looking to siphon funds from unsuspecting individuals. Therefore, it is important to keep your guard up at all times. Remember that celebrities and influencers will not promote any crypto projects or tokens. This is a practice called shilling and it is against the law in most countries. Moreover, remember to do your own research before committing funds to a project, and invest only as much as you can afford to lose completely.