Good day everyone,
I hope you are all well and having excellent day, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at the recent news from blockchain intelligence platform Chainalysis.
AI and Crypto Crime
The blockchain intelligence platform Chainalysis noted in their 2024 Crypto Crime Report how artificial intelligence (AI) could lead to new crypto crimes over the coming years. They noted how AI could begin a new and dangerous wave of crimes in the Web3 and blockchain space.
On Thursday the 14th of March 2024 it was noted by Chainalysis Cybercrimes Research Lead Eric Jardine to Cryptonews that there have been growing and shrinking trends in illicit blockchain activity throughout 2023, and this has help to plan for the sorts of tactics criminals will use in their moves going forward.
Jardine went on to note that internal discussions are already underway regarding how rising technologies such as AI could impact blockchains and large language models (LLMs). Jardine noted:
“I think that there’s ways in which they will affect different categories of crime. You could imagine an AI model that does code audits being used to improve the security of DeFi… conversely the same models could be used by illicit actors to find vulnerabilities in smart contracts.”
Considering the DeFi sector is disproportionately targeted by cryptocurrency theft and with hackers exploiting flaws in code such as obtaining private keys and using price manipulation to steal assets, there is an ever-growing concern over the next potential crimes in the sector.
While the formal audits have been somewhat successful for the blockchain industry, their success at preventing hacks is far from foolproof. AI and its ability to grow and develop at staggering rates means there’s no telling whether it will strengthen smart contacts or their attackers the most. The overall balance of AI's capability and benefits may help of hinder the overall industry down the line, or form a delicate balance of both.
With the absolute volume of stolen DeFi funds falling from $3.1 billion in 2022 to $1.1 billion in 2023 there was also a drop in the total number of incidents, falling from 273 to 172.
While AI could have a large impact on DeFI, the ability of artifical intelligence could also increase the likelihood for romance scams. These are also known as “pig butchering” scams. Generally these scams begin with seemingly innocent contact but are known to evolve into a fabricated relationship that the scammer then exploits for financial gain. Jardine also noted:
“That is an area where a large language model that has infinite patience and is quite creative could be used to devastating effect by illicit actors.”
While the total scam volume fell from $6.5 billion to $4.6 billion, the general amount for the average romance scam payment is around $4,593, though the average victim likely paid far more since such scams often involve multiple payments. As a share of all crypto transactions, illicit activity fell to just 0.34% of blockchain activity in 2023.
Have a great day.
Peace. CryptoGod-1.
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