A US state securities regulator has raised concerns over the increasing use of artificial intelligence in cryptocurrency fraud, warning that scammers are exploiting AI tools, social media, and cryptocurrency ATMs to target investors.
This warning came from Claire McHenry, deputy director of the Nebraska Department of Banking and Finance (NDBF) and president of the North American Securities Administrators Association (NASAA), in her testimony speech, which she is scheduled to present before the US. Securities and Exchange Commission (SEC) Investor Advisory Committee on March 6, 2025.
McHenry noted that securities regulators across US states are recording increasing complaints, investigations, and enforcement actions involving digital assets.
Quoting NASAA’s 2024 enforcement report, she revealed that digital assets were the most frequently cited products in state-level investigations and enforcement actions, surpassing Ponzi schemes, internet-based fraud, and fraudulent stock investments.
Most frequently cited products and schemes. Source: SEC
McHenry pointed to the role of cryptocurrency ATMs in fraudulent schemes. She said that 98% of transactions processed by a single crypto ATM operator in Nebraska were linked to scams. She also highlighted the disproportionate impact of crypto fraud on older Americans, who are often targeted through tech support and investment scams.
Older Americans are more susceptible to crypto scams. Source: SEC
According to McHenry, many victims hesitate to report these crimes due to stigma and self-blame, making it even harder for authorities to track and prevent fraud. She also noted that AI technology has dramatically enhanced the sophistication of these scams. Fraudsters now create convincing phishing schemes, deepfake videos, and automated chatbots to deceive investors. She argued that traditional scam prevention strategies are no longer sufficient and called for improved media literacy to help investors recognize digital deception.
A February 11 report by blockchain forensic firm Merkle Science underscored these concerns, revealing how cybercriminals have been hijacking high-profile accounts throughout 2024. Hackers exploited the credibility of celebrities, tech executives, and industry leaders to promote fraudulent token launches, further demonstrating the evolving nature of cryptocurrency fraud.
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