AI's Deepfake Menace Puts Crypto Security on Edge

Ripple's chief technology officer, David Schwartz, has issued a public warning about a rising threat of deepfake scams targeting XRP holders, emphasizing the misuse of CEO Brad Garlinghouse's likeness in fraudulent schemes. The scams, which leverage AI to generate convincing audio and visual content, are part of a broader trend in crypto fraud, where illicit actors attempt to bypass KYC (know-your-customer) protocols and deceive users into transferring funds. The situation reflects an increasingly sophisticated and alarming shift in fraud tactics as AI tools become more accessible and powerful.

In a recent analysis, MEXC, one of the largest crypto exchanges, reported a 15% increase in "fraudulent liveness" cases between July and August 2025, where AI-generated deepfakes were used to mimic users during identity verification. These cases underscore the growing challenges faced by platforms in maintaining secure onboarding processes. Traditional photo-based KYC systems are no longer sufficient, and liveness detection—both active and passive—has become a critical tool in combating the use of deepfakes to spoof identity checks.

The issue is not limited to visual deepfakes. A separate report highlighted a surge in deepfake voice phishing, or “vishing,” where criminals clone the voices of executives to trick employees into authorizing fraudulent transactions. One notable case involved an European energy conglomerate that lost $25 million after a caller impersonated the company’s CFO using a cloned voice that accurately matched the tone and cadence of the real individual. These attacks often rely on subtle psychological tactics, such as invoking urgency or referencing personal details, to manipulate victims into compliance.

Experts have noted a concerning increase in deepfake-related scams in early 2025, with a 1,633% spike in vishing attempts compared to late 2024. The median loss per individual victim averaged $1,400, and the costs of recovery, including forensic investigations and fraud mitigation, added up to about $1.5 million. The problem is exacerbated by the speed and finality of blockchain-based transactions, which allow attackers to siphon assets before any detection mechanism is triggered.

In response to these threats, crypto platforms like MEXC have enhanced their anti-money laundering and sanctions enforcement efforts. The exchange has also conducted joint training programs with law enforcement to equip compliance teams with the latest tools and techniques for detecting and preventing deepfake fraud. Such proactive measures are seen as essential in aligning with international regulatory standards and safeguarding the integrity of digital asset platforms.

The broader implications of these deepfake scams highlight the need for continuous innovation in security systems and user education. As the technology behind AI-generated content advances, so too must the defenses against its misuse. For Ripple and the wider crypto industry, the challenge lies not only in implementing advanced liveness detection systems but also in fostering a culture of vigilance among users to recognize and report suspicious activities promptly.

Source: [1] Crypto Firm Reports 15% Rise in Use of Deepfakes To ... (https://www.ccn.com/news/technology/mexc-15-rise-deepfakes-to-bypass-kyc/) [2] Deepfake voice phishing drives $20M+ in losses as ... (https://cryptonews.net/news/security/31553821/)