Cardano co-founder: Crypto scams to spike with AI advancements

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Crypto scams are on the rise, and Charles Hoskinson, the co-founder of Cardano, is warning that they will only get worse with the advancement of AI technology.

In a video posted on YouTube, Hoskinson discussed the widespread occurrence of fraudulent activities within cryptocurrencies. These scams involve imposters who falsely represent influential figures such as Hoskinson himself, Elon Musk or Bill Gates to trick individuals into surrendering their valuable digital assets.

Hoskinson shared evidence of a medical blockchain scam, where scammers impersonated him in an email. He clarified that he would never email anyone directly and warned people about the scammers trying to steal their money.

The rapid advancements in generative AI technology amplify the concern expressed by Hoskinson. He showcased a video by leading technology company Nvidia to substantiate his point. This video exhibited the capability of AI to produce realistic human images.

This technology has the potential to be used maliciously, creating fake videos and audio that make it seem as if influential figures are soliciting money or offering investment opportunities.

Hoskinson also warned traders about giveaway scams and impersonation attempts. Scammers could use generative AI to create convincing content that could deceive thousands of people, leading to financial losses and compromised accounts.

Strengthening security measures

Hoskinson predicts millions of dollars worth of cryptocurrencies will be stolen in the coming months. Therefore, he emphasized the need for individuals to remain vigilant and authenticate any communication they receive. He recommended using Pretty Good Privacy (PGP) encryption to verify identities, as AI currently cannot crack such encryption.

“This is the world we’re heading towards because of generative AI,” he said. “It’s one of the dark sides and unintended consequences, but scammers are already doing this.”

Additionally, Hoskinson highlighted Atala Prism, a solution built on Cardano, which aims to create authenticated communication channels. Integrating this technology into various platforms and communication channels can mitigate the impact of scams fueled by generative AI.

Hoskinson reiterated his warning that “you don’t get something for nothing.” He urged viewers to approach all content with skepticism, assuming it is unauthenticated until proven otherwise.

Meta takes action against AI-powered crypto scams

The rise of AI-powered crypto scams has become a growing concern for major tech companies. Meta, the parent company of Facebook, recently highlighted the increase in scams using AI to deceive users.

These fraudulent schemes usually disguise themselves as browser extensions or mobile applications, deceptively presenting as ChatGPT or AI software. Their primary objective is to obtain user credentials and personal information.

Since March 2023, Meta researchers have identified ten malware families utilizing ChatGPT and similar themes to compromise accounts, blocking over 1,000 malicious links on their platform.

In response to these threats, Meta chief security officer Guy Rosen acknowledged the scammers’ exploitation of the surge in interest in generative AI.

“As an industry we’ve seen this across other topics that are popular in their time such as crypto scams fueled by the immense interest in digital currency,” said Rosen. “So from a bad actor’s perspective, ChatGPT is the new crypto.”

While the company is developing tools to detect and block such malware, Meta stressed the importance of prevention and urged users to exercise vigilance.


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