What are AI bots?
AI bots are self-learning software that automates and continuously refines crypto cyberattacks, making them more dangerous than traditional hacking methods.
At the core of current AI-driven cybercrime are AI bots — self-learning software programs that analyze extensive data, make independent decisions, and perform intricate tasks without human input. While these bots have revolutionized sectors like finance, healthcare, and customer service, they have also become tools for cybercriminals, especially in the cryptocurrency realm.
Unlike conventional hacking techniques, which need manual effort and technical skill, AI bots can completely automate attacks, adjust to new cryptocurrency security protocols, and improve their strategies over time. This renders them significantly more efficient than human hackers, who are constrained by time, resources, and error-prone methods.
Why are AI bots so dangerous?
The primary risk from AI-driven cybercrime is volume. A single hacker trying to infiltrate a crypto exchange or deceive users into revealing their private keys has limitations. In contrast, AI bots can launch thousands of attacks at once, honing their methods simultaneously.
- Speed: AI bots can analyze millions of blockchain transactions, smart contracts, and websites within minutes, pinpointing vulnerabilities in wallets (leading to crypto wallet breaches), decentralized finance (DeFi) structures, and exchanges.
- Scalability: A human scammer may send phishing emails to a few hundred individuals. An AI bot can dispatch personalized, expertly crafted phishing emails to millions within the same period.
- Adaptability: Machine learning enables these bots to become more efficient with every unsuccessful attempt, making them increasingly tough to detect and thwart.
This capability to automate, adjust, and launch attacks at a large scale has resulted in a rise in AI-driven crypto fraud, emphasizing the urgent need for effective crypto fraud prevention.
In October 2024, the X account of Andy Ayrey, the developer behind the AI bot Truth Terminal, was breached by hackers. The assailants exploited Ayrey’s account to promote a fraudulent memecoin named Infinite Backrooms (IB). This malicious initiative caused a swift increase in IB’s market value, hitting $25 million. Within 45 minutes, the culprits sold their holdings, making off with over $600,000.
How AI-powered bots can steal cryptocurrency assets
AI-powered bots aren’t merely automating crypto scams — they’re becoming smarter, more targeted, and increasingly difficult to detect.
Here are some of the most hazardous types of AI-driven scams currently employed to steal cryptocurrency assets:
1. AI-powered phishing bots
Phishing attacks are old news in crypto, but AI has transformed them into a far greater danger. Instead of poorly written emails filled with errors, today’s AI bots generate personalized messages that closely resemble genuine communications from platforms like Coinbase or MetaMask. They collect personal data from leaked databases, social media, and even blockchain records, rendering their scams exceptionally convincing.
For instance, in early 2024, an AI-driven phishing campaign targeted Coinbase users by sending emails regarding fake cryptocurrency security alerts, ultimately deceiving users out of nearly $65 million.
Additionally, following the launch of GPT-4 by OpenAI, fraudsters established a bogus OpenAI token airdrop site to capitalize on the excitement. They distributed emails and X posts enticing users to “claim” a nonexistent token — the phishing site closely mimicked OpenAI’s actual site. Victims who followed the lead and connected their wallets had their crypto assets drained automatically.
Unlike traditional phishing, these AI-enhanced scams are polished and targeted, typically devoid of typos or awkward phrasing that would usually indicate a phishing attempt. Some even utilize AI chatbots posing as customer support representatives for exchanges or wallets, deceiving users into revealing private keys or two-factor authentication (2FA) codes under the pretense of “verification.”
In 2022, certain malware specifically targeted browser-based wallets like MetaMask: a strain called Mars Stealer could detect private keys for over 40 different wallet browser extensions and 2FA applications, draining any funds discovered. Such malware often propagates through phishing links, counterfeit software downloads, or pirated crypto tools.
Once inside your system, it might monitor your clipboard (to replace the address when you copy and paste a wallet address), log your keystrokes, or export your seed phrase files — all without any visible signs.
2. AI-powered exploit-scanning bots
Smart contract flaws are a hacker’s paradise, and AI bots are exploiting them faster than ever. These bots continuously examine platforms like Ethereum or BNB Smart Chain, searching for flaws in newly launched DeFi initiatives. As soon as they identify an issue, they exploit it automatically, often within minutes.
Researchers have proved that AI chatbots, such as those driven by GPT-3, can evaluate smart contract code to uncover exploitable vulnerabilities. For example, Stephen Tong, co-founder of Zellic, highlighted an AI chatbot detecting a flaw in a smart contract’s “withdraw” function, akin to the shortcoming exploited in the Fei Protocol attack, which resulted in an $80-million loss.
3. AI-enhanced brute-force attacks
Brute-force attacks used to be time-consuming, but AI bots have rendered them alarmingly efficient. By studying past password breaches, these bots swiftly identify patterns to crack passwords and seed phrases in record time. A 2024 study on desktop cryptocurrency wallets, including Sparrow, Etherwall, and Bither, found that weak passwords dramatically reduce resistance to brute-force assaults, underscoring the necessity of employing strong, complicated passwords to secure digital assets.
4. Deepfake impersonation bots
Imagine watching a video of a trusted crypto influencer or CEO urging you to invest — but it’s entirely fabricated. That’s the reality of deepfake scams fueled by AI. These bots produce ultra-realistic videos and voice recordings that deceive even knowledgeable crypto holders into transferring funds.
5. Social media botnets
On platforms like X and Telegram, hordes of AI bots propagate crypto scams on a massive scale. Botnets like “Fox8” employed ChatGPT to generate hundreds of convincing posts promoting scam tokens and engaging with users in real-time.
In one instance, fraudsters misused the identities of Elon Musk and ChatGPT to advertise a fake crypto giveaway — complete with a deepfaked video of Musk — deceiving individuals into sending funds to scammers.
In 2023, Sophos researchers uncovered crypto romance scammers leveraging ChatGPT to converse with multiple victims simultaneously, enhancing the credibility and scalability of their affectionate messages.
Similarly, Meta reported a marked increase in malware and phishing links disguised as ChatGPT or AI tools, frequently linked to crypto fraud schemes. In the realm of romance scams, AI is amplifying so-called pig butchering operations — long-con scams where fraudsters cultivate relationships and subsequently entice victims into fictitious crypto investments. A notable case unfolded in Hong Kong in 2024: Police dismantled a criminal organization that cheated men across Asia out of $46 million through an AI-assisted romance scam.
Automated trading bot scams and exploits
AI is increasingly involved in the domain of cryptocurrency trading bots — often as a buzzword to deceive investors and occasionally as a means for technical exploits.
A noteworthy instance is YieldTrust.ai, which in 2023 promoted an AI bot allegedly yielding 2.2% returns daily — an astronomical and implausible profit. Regulators from several states investigated and found no evidence the “AI bot” even existed; it appeared to be a classic Ponzi scheme, using AI as a tech buzzword to attract victims. YieldTrust.ai was ultimately shut down by authorities, but not before swindling investors with its slick marketing.
Even when an automated trading bot is legitimate, it often doesn’t function as the money-making machine scammers claim. For example, blockchain analysis firm Arkham Intelligence highlighted a scenario where a so-called arbitrage trading bot (likely advertised as AI-driven) carried out an incredibly intricate series of trades, including a $200-million flash loan — and ended up netting a paltry $3.24 in profit.
In fact, many “AI trading” scams will take your deposit and, at best, run it through some random trades (or sometimes not trade at all), then conjure excuses when you attempt to withdraw. Some dubious operators even utilize social media AI bots to fabricate a track record (e.g., bogus testimonials or X bots that perpetually post “winning trades”) to create an illusion of success. It’s all part of the deception.
On a more technical level, criminals do employ automated bots (not always AI, but occasionally labeled as such) to exploit the cryptocurrency markets and infrastructure. Front-running bots in DeFi, for instance, automatically insert themselves into pending transactions to extract a bit of value (a sandwich attack), while flash loan bots execute rapid trades to capitalize on price discrepancies or vulnerable smart contracts. These require coding know-how and typically aren’t marketed to victims; instead, they serve as direct theft tools used by hackers.
AI could enhance these by streamlining strategies faster than a human. However, as previously noted, even highly advanced bots don’t guarantee substantial gains — the markets are competitive and unpredictable, a reality even the most sophisticated AI cannot reliably predict.
Meanwhile, the risk to victims is very real: If a trading algorithm malfunctions or is maliciously coded, it can deplete your funds in seconds. There have been instances of rogue bots on exchanges triggering flash crashes or draining liquidity pools, resulting in significant slippage losses for users.
How AI-powered malware fuels cybercrime against crypto users
AI is instructing cybercriminals on how to breach crypto platforms, enabling a wave of less-skilled attackers to launch credible assaults. This helps clarify why crypto phishing and malware campaigns have expanded so dramatically — AI tools allow bad actors to automate their scams and continually refine them based on what works.
AI is also supercharging malware threats and hacking tactics directed at cryptocurrency users. One prominent concern is AI-generated malware, harmful programs that utilize AI to adjust and avoid detection.
In 2023, researchers presented a proof-of-concept called BlackMamba, a polymorphic keylogger that employs an AI language model (similar to the technology behind ChatGPT) to rewrite its code with every execution. This means each time BlackMamba runs, it generates a new variant in memory, enabling it to slip past antivirus and endpoint security measures.
In trials, this AI-crafted malware went unnoticed by a top-tier endpoint detection and response system. Once active, it could stealthily record everything the user types — including crypto exchange passwords or wallet seed phrases — and transmit that data to attackers.
While BlackMamba was merely a lab demonstration, it underscores a real threat: Criminals can exploit AI to create shape-shifting malware that targets cryptocurrency accounts and is significantly more challenging to detect than traditional viruses.
Even in the absence of cutting-edge AI malware, threat actors leverage the popularity of AI to distribute classic trojans. Scammers frequently establish fraudulent “ChatGPT” or AI-focused applications containing malware, knowing users might let their guard down due to the AI branding. For instance, security analysts noted phony websites mimicking the real ChatGPT site, featuring a “Download for Windows” button; if clicked, it silently installs a crypto-stealing Trojan on the user’s device.
Beyond the malware itself, AI is diminishing the skill barrier for novice hackers. Previously, a criminal needed some coding acumen to create phishing pages or viruses. Now, underground “AI-as-a-service” tools do a significant portion of the work.
Illicit AI chatbots like WormGPT and FraudGPT have surfaced on dark web forums, offering to generate phishing emails, malware code, and hacking tips upon request. For a fee, even non-technical criminals can employ these AI bots to churn out convincing scam sites, develop new malware variants, and search for software vulnerabilities.
How to protect your crypto from AI-driven attacks
AI-driven threats are becoming increasingly sophisticated, making robust security measures crucial for safeguarding digital assets from automated scams and hacks.
Below are the most effective strategies to protect crypto from hackers and defend against AI-powered phishing, deepfake scams, and exploit bots:
- Use a hardware wallet: AI-driven malware and phishing attacks mainly target online (hot) wallets. By utilizing hardware wallets — such as Ledger or Trezor — you keep private keys entirely offline, rendering them virtually inaccessible to hackers or malicious AI bots. For instance, during the 2022 FTX collapse, users with hardware wallets avoided the massive losses endured by those with funds stored on exchanges.
- Enable multifactor authentication (MFA) and strong passwords: AI bots can breach weak passwords using deep learning in cybercrime, employing machine learning algorithms trained on leaked data breaches to forecast and exploit vulnerable credentials. To combat this, always activate MFA via authenticator apps like Google Authenticator or Authy rather than relying on SMS-based codes — hackers have been known to take advantage of SIM swap vulnerabilities, rendering SMS verification less secure.
- Beware of AI-powered phishing scams: AI-generated phishing emails, messages, and counterfeit support requests have become almost indistinguishable from genuine ones. Exercise caution when clicking on links in emails or direct messages, always confirm website URLs manually, and never disclose private keys or seed phrases, regardless of how persuasive the request may appear.
- Verify identities carefully to avoid deepfake scams: AI-driven deepfake videos and audio recordings can convincingly impersonate crypto influencers, executives, or even people you know personally. If someone is requesting funds or promoting an urgent investment opportunity through video or audio, confirm their identity through multiple channels before taking action.
- Stay informed about the latest blockchain security threats: Regularly following trusted blockchain security sources such as CertiK, Chainalysis, or SlowMist will keep you updated on the latest AI-driven threats and the tools available to protect yourself.
The future of AI in cybercrime and crypto security
As AI-driven crypto threats evolve rapidly, proactive and AI-powered security solutions become crucial for protecting your digital assets.
Looking ahead, AI’s role in cybercrime is expected to grow, becoming increasingly sophisticated and harder to detect. Advanced AI systems will automate complex cyberattacks like deepfake-based impersonations, exploit smart-contract vulnerabilities instantly upon detection, and carry out precision-targeted phishing scams.
To combat these advancing threats, blockchain security will increasingly depend on real-time AI threat detection. Platforms like CertiK already utilize advanced machine learning models to monitor millions of blockchain transactions daily, identifying anomalies immediately.
As cyber threats become more intelligent, these proactive AI systems will be essential in preventing major breaches, minimizing financial losses, and combating AI and financial fraud to preserve trust in cryptocurrency markets.
Ultimately, the future of crypto security will rely heavily on industry-wide collaboration and shared AI-driven defense mechanisms. Exchanges, blockchain platforms, cybersecurity providers, and regulators must work closely together, leveraging AI to identify threats before they materialize. While AI-powered cyberattacks will continue to evolve, the crypto community’s best defense is remaining informed, proactive, and adaptive — transforming artificial intelligence from a threat into its strongest ally.
