How to spot these identity thefts and stay safe from this scam

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Over the past few months, scammers have been using deepfakes to trick investors and traders. This is a notorious exploit that is quite hard to spot and has caused massive losses lately. But what are deepfakes and how do crypto scammers use them to exploit market participants? Follow us to find out.

The cryptoverse has been ravaged by hackers and scammers throughout 2022. In fact, over $4.3 billion was stolen by these bad actors between January and November of last year. What’s worse is that as hackers gain more knowledge, they come up with new and various ways to siphon funds from unsuspecting individuals.

For example, over the past few months, scammers have been using deepfakes to trick investors and traders. This is a notorious exploit that is quite hard to spot and has caused massive losses lately. But what are deepfakes and how do crypto scammers use them to exploit market participants? Follow us to find out.

What is a deepfake scam?

Deepfake technology is powered by artificial intelligence (AI) which can generate hyper-realistic images and videos. It’s often used to create videos of people saying and doing things they’ve never actually done.

To achieve this, machine language (ML) algorithms are deployed to analyze and mimic the verbal tone, facial expressions and mannerisms of a given individual. Initially, it was created for online fun and games and was mostly used in entertainment industry and social media memes. However, its implications have gradually become complex, as malicious entities would use this powerful technology to spread misinformation, create fake news, and steal identities by impersonating someone.

How do scammers use deepfakes in the crypto world?

In the crypto world, scammers use deepfake technology to impersonate popular characters and celebrities. With the right tools, they can create a fake video of any well-known character in the cryptoverse. Hackers use this technology and impersonate some big names related to the crypto world and spread misinformation, promote fake crypto projects, etc.

People who are unaware of these technologies can easily fall prey to these scams. They may even give their private keys to malicious entities thinking they are handing over the credentials to a trustworthy industry expert. And once these hackers or scammers gain access to the wallets, they siphon off all the stored assets.

Or in some cases, hackers spread misinformation about a random contest or ask users to invest a particular amount for a reward. They create a sense of urgency for investments by providing a time frame and making users believe in the credibility of this offer. Users unaware of these scams often invest in digital assets or even fiat currency, and once the time limit is reached, the hacker closes the portal and disappears without a trace.

Examples of Deepfake Scams in the Crypto Industry

In August 2022, Patrick Hillman, Binance’s director of communications, said hackers created a fake of him and used it to set up fake meetings with several of his contacts. The feat surfaced after several of Hillman’s contacts began thanking him for arranging these get-togethers. One contact even shared a screenshot of the alleged Zoom call with the deep fake.

Fortunately, no casualties were reported following the incident, as Hillman was quick to bring it to the attention of the general public.

Earlier in May 2022, hackers created an in-depth Elon Musk fake to coerce users into investing in a fake crypto exchange called BitVex. The fake deep video promised users 30% dividends every day for the rest of their lives. However, the fake deep wasn’t very convincing as Musk’s voice was quite robotic and didn’t sync well with his lip movements.

More recently, hackers used deep forgery technology to alter an old interview with Sam Bankman-Fried, the former CEO of now bankrupt cryptocurrency exchange FTX. In the fake video, the hackers gave the impression that SBF was promoting some sort of compensation scheme where users affected by the FTX collapse could get some of their funds back.

The video instructs affected users to visit ftxcompensation.com and send any amount of crypto to a wallet address mentioned there. In return, the wallet address would return double the amount. This is a very common scheme and scammers simply pocket the tokens after you send them.

How will you identify a crypto deepfake scam?

According to David Schwed, COO of Halborn, a blockchain security company, whenever such videos appear, you should keep a close eye on the subjects. Since these videos are compiled from a bunch of photography and video, creating the perfect set of human eyes that naturally blink while talking is difficult and often falls into what VFX artists call, the weird valley.

Another way is to directly engage in a quick conversation with the subject and ask questions that only the real subject will know the answers to. Also look for inconsistencies, blemishes, blurs, inconsistent lighting, etc. in the video. These are clear giveaways that the video has been transformed. Audio is also very important. Poorly made videos will sound robotic and are a big red flag.

Most importantly, never share your crypto credentials with anyone, even if they are a renowned figure in the digital asset industry. Also, do not blindly invest in a project, especially at the request of others. Always do your own research before putting your earned money on the line.

Conclusion

The crypto space is filled with bad actors looking to siphon off funds from unsuspecting individuals. Therefore, it is important to stay on your toes at all times. Remember that celebrities and influencers will not promote any crypto projects or tokens. This is a practice called shilling and it is illegal in most countries. Also, remember to do your own research before committing funds to any project and only invest what you can afford to lose completely.

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