The European Union Agency for Law Enforcement Cooperation (Europol)’s latest report, has flagged significant concerns within the cryptocurrency ecosystem, particularly regarding non-fungible tokens (NFTs) and Bitcoin exchange-traded funds (ETFs).
According to the “Internet Organised Crime Threat Assessment (IOCTA) 2024” report, while large-scale fraud involving NFTs has not yet materialised, the adoption of Bitcoin ETFs could be exploited by scammers.
Europol suggests that inexperienced individuals gaining exposure to cryptocurrency through ETFs might become targets for fraudsters. Additionally, companies issuing cryptocurrency ETFs, which need to hold large cryptocurrency reserves, could attract cybercriminals.
The agency also anticipates a rise in artificial intelligence-assisted cybercrimes.The report details how AI tools are enabling non-technical individuals to conduct sophisticated online crimes, with AI-generated deep fakes and false advertisements being widely used to target potential victims.
In response, Europol has emphasised the need for enhanced tools to counter technology abuse and protect the EU financial system. Catherine De Bolle, Europol’s executive director, stressed the importance of law enforcement agencies building robust capacities to counter AI-leveraged cybercrime threats. In her words:
“Law enforcement agencies are expected to build a robust capacity to counter the growing threats stemming from cybercriminals leveraging AI, both in terms of human resources and technical skills.”
The report further warns of the potential far-reaching impacts of advancements in deepfake technology. Europol anticipates an increase in sexual extortion cases, where bad actors could produce fake content to threaten victims.
“This trend would require law enforcement agencies to have more suitable and sophisticated tools to identify which (parts of) audio, image and video content are deepfakes,”
the report read.
Notably, this report follows another report published by the EU Innovation Hub condemning the use of privacy coins and cryptocurrency mixers because of the significant challenges they pose for regulation and law enforcement. The report noted that these tools obscured transaction trails, making it nearly impossible to track illicit activities. “Mixers and privacy coins have complicated tracing for years, and newer developments like Mimblewimble and zero-knowledge proofs also obscured cryptocurrency addresses, balances, and transactions,” the report claimed.
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