A network security firm is warning that criminals have developed an artificial intelligence (AI) tool that targets crypto exchange platforms.
In a new report, Cato Networks says bad actors are selling a deepfake tool in underground markets that allows users to bypass a crypto exchange’s identity authentication tests.
According to the firm, users rely on the tool not to hack into existing accounts but to create fake ones for money laundering purposes.
“Creating verified but synthetic accounts enables money laundering operations, mule accounts, and other forms of fraud. According to AARP (American Association of Retired Persons), new account fraud accounted for more than $5.3 billion in losses in 2023 (up from $3.9 billion in 2022).”
Cato Networks says bad actors initially generate fake credentials and images using AI-rendering websites. They subsequently use the deepfake tool to forge passports and create videos designed to pass a crypto exchange’s facial recognition systems. After those steps, the criminals upload the fake government ID to a crypto exchange to create a new and verified account.
“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.”
The firm also shares a video showing how the tool was used to create a verified level one account on a crypto exchange in a matter of minutes.
Cato Networks says crypto exchanges should update their security systems to combat new account fraud attacks.
“AI is heavily hyped in the media, but threat actors have been perfecting their use of deepfake technologies for quite some time.
What can organizations do to defend themselves against AI threats? Cato CTRL recommends collecting threat intelligence – be it from human intelligence (HUMINT), open-source intelligence (OSINT), or other means – and staying up to date on the latest cybercrime trends.
Threat actors will continue to evolve and find ways to employ new deepfake technologies and software to their advantage.”
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