Crypto ranks as second most targeted industry for ID fraudsters in 2024

The cryptocurrency sector has become a target for identity-based fraud in recent months due to its anonymity.

According to the AU10TIX fraud report shared with Crypto.news, cryptocurrency-related platforms accounted for 29% of global identity fraud attempts in the second quarter of 2024, with the sector ranking just behind the payments sector at 52%.

As payment providers tighten security protocols, identity thieves are turning to decentralized exchanges and wallets. The anonymity of transactions on blockchain networks makes them attractive to criminals looking to create fake profiles and run fraud schemes.

The increase follows a trend of cybercriminals shifting to less regulated sectors. One of the primary methods used by scammers is now identity impersonation bots, enhanced by deepfake technology, according to the report.

The report notes that these bots are designed to create realistic fake accounts, allowing criminals to infiltrate platforms and carry out fraud schemes.

Recent notable targets of deepfakes promoting crypto scams include Ethereum co-founder Vitalik Buterin, Ripple CEO Brad Garlinghouse, Tesla CEO Elon Musk, and most recently Apple CEO Tim Cook.

While some of these scams have failed, others have succeeded. Bitget’s June 2024 report confirmed that losses from deepfake-related scams have exceeded $79 billion in the past two years, with a massive 245% increase this year.

In Q2 2024, the crypto industry recorded losses of $572 million due to fraud and attacks. Furthermore, the latest data from Chainalysis shows that crypto crime accounted for a total of $24.2 billion in illicit transactions in 2023, representing 0.34% of total crypto trading volume.

This marks a decrease from previous years and reflects efforts to improve security measures. However, despite this improvement, cryptocurrency-related ransomware and dark web market activity has increased in recent months.

Meanwhile, the AU10TIX report confirmed that the rise in identity fraud across all sectors is particularly affecting the Asia-Pacific region, with identity fraud rates set to increase by 24% to 3.27% between 2022 and 2023.

Notably, the shift towards decentralized finance and the rise of Fraud-as-a-Service have also contributed to the vulnerability of the crypto industry. Reports suggest that DeFi platforms are particularly susceptible to exploits, with $739 million stolen in Q1 2024 alone due to phishing, attacks, and poor code security.