Regulators Wage High-Tech War Against AI-Driven Crypto Scams

Australia’s securities regulator has intensified its campaign against online fraud, with crypto-related scams making up one-fifth of the 14,000 scam websites taken down over the past two years, according to the Australian Securities and Investments Commission (ASIC). Of these, 3,015 were specifically linked to cryptocurrency schemes. The regulator has expanded its enforcement scope to include social media advertisements on platforms like Facebook and Instagram, which are increasingly being used to funnel users to fraudulent investment sites. This move aims to address the growing complexity of online fraud schemes that exploit emerging technologies such as artificial intelligence.

ASIC reported removing an average of 130 malicious websites weekly, with the regulator noting that scammers frequently deploy sophisticated tactics to evade detection. These include the use of “AI washing,” where fraudsters falsely claim their platforms use AI to generate guaranteed returns, as well as fake celebrity endorsements and cloaking techniques to mask fraudulent activities. Deputy Chair Sarah Court emphasized the importance of adapting to these evolving threats, stating that expanding enforcement to social media ads will help protect Australian consumers from increasingly sophisticated online fraud.

Investment scams remain the most financially damaging category of fraud in Australia, with victims losing $945 million to these schemes in 2024 alone. ASIC highlighted that regulated investment instruments offer standard investor protections, such as disclosures, custody rules, and conflict management, which are often absent in unregulated trading platforms. Bridget Nichols, chief commercial officer at Monochrome, noted that investors are at greater risk on unregulated platforms, where bad actors can operate with minimal oversight.

Regulatory scrutiny of the cryptocurrency sector has also extended to crypto exchanges, as demonstrated by recent actions taken by AUSTRAC, Australia’s financial intelligence agency. AUSTRAC has ordered an external audit of Binance Australia, citing “serious concerns” with the exchange’s anti-money laundering and counter-terrorism financing controls. The agency highlighted weaknesses in Binance’s compliance framework, including limited scope for independent reviews, high staff turnover, and a lack of local management oversight. AUSTRAC CEO Brendan Thomas emphasized that global operators must adapt their systems to meet local regulatory requirements, particularly given the increased vulnerability of digital currencies to criminal abuse.

In a broader crackdown, AUSTRAC and the Australian Federal Police (AFP) have also targeted crypto ATMs, which have become a point of concern in the fight against scams. Australia has nearly 2,000 crypto ATMs, with 150 unique reports of scams involving these machines filed between January 2024 and January 2025, resulting in losses exceeding $2 million. In response, AUSTRAC has imposed transaction limits and revised operating rules for crypto ATM operators to mitigate risks. These measures reflect a coordinated effort to combat the use of digital assets in illicit financial activity while safeguarding consumer interests.

ASIC’s expanded enforcement efforts are part of a larger trend of regulatory action across the financial sector. The regulator has also taken legal action against individuals involved in large-scale investment scams, including four men in Victoria who were recently charged with money laundering. As fraud schemes evolve with new technologies, regulators stress the importance of public awareness and skepticism when encountering promises of AI-generated returns or celebrity endorsements in investment promotions. The ongoing takedown of scam websites and the expansion of regulatory oversight signal a continued commitment to addressing the risks posed by digital fraud in the Australian financial landscape.

Source: [1] Crypto Scam Sites Make Up a Fifth of ASIC's Two-Year ... (https://finance.yahoo.com/news/crypto-scam-sites-fifth-asic-054614868.html) [2] Australian Regulator Removes 3000 Crypto Scams (https://cointelegraph.com/news/australia-regulator-crypto-investment-scam-update) [3] ASIC Blocks 14000 Scam Sites as Crypto Cons Flood Online (https://www.bitdegree.org/crypto/news/asic-shut-down-14000-scam-sites-as-crypto-cons-flood-online) [4] AUSTRAC orders audit of global crypto exchange (https://www.austrac.gov.au/news-and-media/media-release/austrac-orders-audit-global-crypto-exchange) [5] Australia watchdog orders Binance unit to conduct audit ... (https://www.reuters.com/sustainability/boards-policy-regulation/australia-watchdog-orders-binance-unit-conduct-audit-over-money-laundering-2025-08-22/) [6] Australia Orders Binance Audit, Flagging 'Serious Concerns' (https://www.bloomberg.com/news/articles/2025-08-22/australia-orders-binance-audit-after-flagging-serious-concerns) [7] Australia expands crackdown on online scams (https://dig.watch/updates/australia-expands-crackdown-on-online-scams)