Cato Networks, a cybersecurity firm, warns about a new threat targeting cryptocurrency exchanges. The firm indicates that criminals have successfully bypassed authentication systems using AI-based deepfake technology. The objective is not to seize existing accounts but to facilitate money laundering by creating fake accounts.
The Rise of Fake Identities and Accounts
According to Cato Networks’ report, criminals are actively selling these deepfake tools in underground markets. These tools are employed to bypass the identity verification processes of exchanges. The process specifically aims to create new, verified accounts using fake identity information, laying the groundwork for illegal activities like money laundering, fraud, and proxy accounts.
The firm noted that in 2023, fraudulent accounts caused damages exceeding $5.3 billion compared to 2022.
How Deepfake Technology is Utilized
Malicious actors initially produce fake identity documents and visuals using AI-supported tools. They then create realistic copies of documents, such as passports, and prepare special videos to bypass cryptocurrency exchanges’ facial recognition systems. Once these steps are completed, a forged ID document is uploaded to open a verified account on the exchange.
According to a Cato Networks representative, “New account fraud allows scammers to find vulnerabilities in security, making fake account creation possible within minutes.” The firm has released a video demonstrating how this process works to highlight the seriousness of the threat.
Recommendations for Cryptocurrency Exchanges
Cato Networks emphasizes that cryptocurrency exchanges need to update their security systems against such threats. The firm suggests that technical measures alone are insufficient and advocates for threat monitoring using human intelligence (HUMINT) and open-source intelligence (OSINT) methods.
The representative added, “Many claims about AI technology are circulating in the media. However, threat actors have already begun using these technologies in the field. Over time, they will undoubtedly develop deepfake methods even further.”
Cybersecurity experts underscore the necessity for exchanges to implement additional measures in their authentication processes to make it more difficult to create such fake accounts. It is particularly noted that two-factor authentication and advanced facial recognition technologies could be effective against these threats.
AI-powered deepfake technologies have the potential to increase fraudulent activities by targeting security vulnerabilities in the cryptocurrency sector. Cato Networks asserts that exchanges should not rely solely on technological solutions and that it is vital to keep threats updated.
The rapidly evolving structure of the cryptocurrency sector creates new opportunities for cybercriminals. Therefore, it has become imperative for both exchanges and users to strengthen their security measures.
