Crypto scams to intensify with AI, warns Cardano’s Charles Hoskinson

The Future of Crypto Scams

Cardano co-founder Charles Hoskinson has issued a warning about the growing threat of crypto scams, particularly with the advent of artificial intelligence technology.

In a video posted on youtube, Hoskinson cautioned that scammers could now leverage AI to create convincing content, including realistic videos and audio, making it appear as if prominent figures are soliciting money or offering investment opportunities. He warned that this could lead to thousands of people falling victim to sophisticated scams.

“Millions of dollars worth of ADA and other cryptocurrencies will be stolen. This is the world we’re heading towards because of generative AI. It’s one of the dark sides and unintended consequences, but scammers are already doing this,” he said.

Hoskinson shared evidence of a medical blockchain scam where scammers impersonated him in an email. He warned traders about giveaway scams and impersonation, emphasizing the risk of losing funds or account access.

Despite his efforts to educate and raise awareness about scams, he acknowledged feeling helpless in the face of this growing threat.

Hoskinson stressed the need for individuals to remain vigilant and authenticate any communication they receive.

He suggested using Pretty Good Privacy (PGP) encryption as a means to verify identity, as AI is currently unable to crack such encryption.

Additionally, he highlighted Atala Prism, a solution built on the Cardano network, which aims to establish authenticated communication channels to mitigate the impact of AI-powered scams.

Charles Hoskinson

2023-06-06 13:51

Just a reminder that I’ll never email you directly. Every day scumbag piece of shit scammers impersonate me attempting to steal money from you. If you think you’re talking with me, then ask the person to verify his identity with a signature from my PGP key. They can’t https://t.co/Qmpm06J8R8

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Growing problem

Hoskinson’s concern wasn’t an unfounded one. California’s Department of Financial Protection and Innovation (DFPI) has recently intensified its battle against crypto scams, particularly those exploiting AI technology.

In April, The agency issued cease and desist letters to five companies — Maxpread Technologies, Harvest Keeper, Visque Capital, Coinbot and QuantFund — accusing them of employing deceptive tactics to defraud unsuspecting investors.

The DFPI alleges that these companies falsely claimed to generate substantial returns through AI-powered crypto trading, enticing investors with promises of high profits and multi-level marketing strategies.

Furthermore, Maxpread Technologies went to extreme lengths by reportedly employing an AI-generated avatar posing as its “CEO – Michael Vanes” to deceive potential investors.

However, the actual CEO of Maxpread Technologies is Jan Gregory, who had been initially presented as the company’s chief marketing officer and corporate brand manager.

DFPI Commissioner Clothilde Hewlett condemned these fraudulent practices, saying, “Scammers are taking advantage of the recent buzz around artificial intelligence to entice investors into bogus schemes.”

Hewlett emphasized the agency’s commitment to safeguarding California consumers and investors from unscrupulous actors engaged in such activities.

The regulator categorized the accused entities’ operations as Ponzi schemes, as they allegedly made false claims about employing AI, knowledge, skill and experience to generate daily returns ranging from 0.6 to 4.81 percent for investors.

The DFPI’s cease and desist letters mark the latest efforts to combat crypto-related crimes in California following their investigation into the collapsed cryptocurrency exchange FTX and founder Sam Bankman-Fried.

In December, the DFPI ordered MyConstant to cease offering select crypto products, citing violations of securities laws by selling “unqualified, nonexempt securities.”

A spokesperson for the DFPI clarified, “The entities named have been ordered to stop operating in California because they have violated securities law. This means no selling or even offering ‘investments’ like these to California residents.”