According to blockchain intelligence platform Chainalysis, Artificial Intelligence (AI) could pave the way for a new wave of crypto-related crime in the near future.
In a private video webinar witnessed by Cryptonews on Thursday, Eric Jardine, the Lead Researcher for Cybercrimes at Chainalysis, outlined the evolving trends in illicit blockchain activities in 2023 and anticipated the strategies criminals might adopt next.
Jardine highlighted ongoing internal discussions about the potential impact of emerging technologies on blockchain-related crimes, particularly focusing on Large Language Models (LLMs).
He suggested various scenarios where AI could influence different types of crimes, such as utilizing AI models for code audits to enhance DeFi security, or conversely, exploiting the same models to identify vulnerabilities in smart contracts.
DeFi, in particular, remains a prime target for cryptocurrency theft, often vulnerable to code flaws, private key breaches, and price manipulation tactics employed by hackers.
While formal audits have become customary in the blockchain industry, their effectiveness in preventing hacks is not guaranteed. The advent of AI further complicates the situation, raising uncertainty about whether it will fortify smart contracts or provide more advantages to their attackers.
Despite a significant decrease in the absolute volume of stolen DeFi funds from $3.1 billion in 2022 to $1.1 billion in 2023, with a reduction in the number of incidents from 273 to 172, the potential impact of AI remains a concern.
Aside from DeFi, AI’s potential implications in romance scams, also known as “pig butchering” scams, are worrisome. Jardine emphasized the possibility of AI-powered models being used to execute intricate romance scams, exploiting fabricated relationships for financial gain.
Despite a decline in the overall scam volume from $6.5 billion to $4.6 billion, romance scammers in the crypto space nearly doubled their revenue last year. The average payment in romance scams stands at $4,593, suggesting victims likely incurred higher losses due to multiple payments involved in such schemes.
While illicit activity as a share of all crypto transactions decreased to just 0.34% of blockchain activity in 2023, the potential misuse of AI in various forms of crypto-related crimes remains a significant concern.