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A new study reveals startling statistics on the rise of deep fake fraud in the crypto industry.
According to a recent Sumsub <a href="https://sumsub.com/crypto-report-2023/" target="_blank" rel="noopener noreferrer nofollow">report</a>, 2023 has been marked by increasing professionalization in fraud tactics, with 77% of crypto companies observing new patterns and schemes. Deep fakes, in particular, continue to pose a significant challenge, with 70% of companies interviewed noting an uptick in their use to defraud victims.
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 Our annual crypto report is here! 👏<a href="https://t.co/B7zKLCpFPQ" target="_blank" rel="noopener noreferrer nofollow">https://t.co/B7zKLCpFPQ</a> Check out State of Verification and Monitoring in the Crypto Industry 2023 for the latest insights on enhancing the user experience and improving verification in the crypto industry. Here are some key highlights that… <a href="https://t.co/MeofY0WIyo" target="_blank" rel="noopener noreferrer nofollow">pic.twitter.com/MeofY0WIyo</a>— Sumsub (@Sumsubcom) <a href="https://twitter.com/Sumsubcom/status/1717538729173086526?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">October 26, 2023</a>
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Additionally, there was a staggering 128% increase in deep fake use within the crypto industry in 2023, compared to the previous year.
Notably, the report indicates that 55% of crypto companies have experienced a spike in fraud-related losses, affecting both their financial and reputational standings.&nbsp;
In one case, a crypto company reported two <a href="https://www.personneltoday.com/hr/linkedin-ai-profile-fake-images-photographs/" target="_blank" rel="noopener noreferrer nofollow">AI-generated profiles</a>, sophisticated enough to evade software detection, necessitating diligent manual verification.
Another significant incident in the report involved a massive layering scheme affecting users in France, Italy, <a href="https://crypto.news/portugal-proposes-a-28-crypto-tax-in-the-2023-national-budget/" target="_blank" rel="noopener noreferrer nofollow">Portugal</a>, and Spain. Fraudsters attempted to launder funds through multiple bank transfers to mules, which were then converted to crypto and sent to popular crypto exchange services to obscure the funds’ origin.&nbsp;
Simultaneously, the report showed an&nbsp; industrial shift from document-based to <a href="https://identityweek.net/sumsub-enables-non-document-uk-customer-onboarding-in-five-seconds-with-via-major-banks/" target="_blank" rel="noopener noreferrer nofollow">Non-Doc Verification</a> solutions is underway, heralding faster verification times from 38 seconds and even as quick as three seconds in some regions.
You might also like: <a href="https://crypto.news/us-representative-introduces-new-bill-to-combat-crypto-fraud/" rel="noopener noreferrer nofollow"> US representative introduces new bill to combat crypto fraud </a>
<h2 class="wp-block-heading" id="improvement-in-verification-time">Improvement in verification time</h2>
Despite the proliferation of AI-generated profiles, verification time has nearly halved from 2022 to 2023. For instance, Europe currently leads with the fastest onboarding, taking less than 30 seconds.&nbsp;
Verification speed has also increased impressively in Africa, Asia, and the Latin America (Latam) region. In 2023, a significant decrease in average verification time was observed among Sumsub’s crypto clients. The most impressive improvements were seen in Brazil, Mexico, and Germany.
However, a troubling aspect noted in the report is that as verification processes become more efficient, they also face new challenges, especially in the aspect of Proof of Address (PoA) verification. With document types varying greatly across countries, it has led to drop-offs as users struggle to submit the required documents.&nbsp;
Despite these challenges, crypto companies are increasingly turning to advanced technical infrastructure and providers with extensive document-handling experience to achieve high pass rates.
It is reportedly because legacy know-your-customer (KYC) providers are struggling to identify advanced fraud methods, emphasizing the need for robust and technologically advanced solutions.&nbsp;
Furthermore, according to analysts at Sumsub, modern <a href="https://crypto.news/crypto-scams-on-the-rise-government-institutions-call-for-regulatory-clarity-weekly-recap/" target="_blank" rel="noopener noreferrer nofollow">anti-fraud</a> solutions leveraging AI technology are essential in combating these advanced fraud methods, demonstrating their value in detecting deep fake artifacts, searching for document templates through similarity analysis, and automatically rejecting invalid applications.
Read more: <a href="https://crypto.news/blockchain-artificial-intelligence-mean-future-finance/" rel="noopener noreferrer nofollow"> What Blockchain and Artificial Intelligence Could Mean for the Future of Finance </a>

Crypto industry observing unprecedented fraud scenarios

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