At the 2025 FINRA Annual Conference, experts warned that AI-driven crypto scams are becoming increasingly sophisticated, targeting retail investors with more convincing impersonation tactics and phishing schemes. The session, titled “Mitigating Impacts of Fraud and Scams Targeting Customers,” featured Christine Kieffer, Senior Director of Investor Education at FINRA; Brooks Brown, Senior Director at FINRA’s High-Risk Registered Representative Unit; Tara Ambrose, Senior Financial Fraud Ombudsperson at the Minnesota Department of Commerce; and Bismarck Prado, Director of Fraud & Senior Investor Protection at Commonwealth Financial Network.
AI-Powered Crypto Scams Emerge as Major Threat
Kieffer opened the discussion by highlighting the alarming rise in crypto-related fraud, citing FTC data that recorded $5.7 billion in investment fraud complaints in 2024. She noted that crypto scams now rank among the top three fraud categories across all age groups. “Investment and cryptocurrency scams are growing at a faster rate than most other types of fraud,” Kieffer stated, emphasizing how scammers exploit emerging technologies to deceive victims.
Ambrose explained how many scams begin with tech support pop-ups, which trick victims into calling fraudulent numbers. From there, scammers impersonate government agencies and financial institutions, manipulating victims to transfer funds to fake crypto wallets. “They all seem to end at the government agencies, but they start sometimes at the popup,” she said.
Prado provided further insight into impersonation scams, where fraudsters use deepfake videos and AI-generated content to create a sense of urgency. Victims are instructed to drive to Bitcoin ATMs, deposit funds, and remain on the line throughout the process, ensuring they don’t share details with anyone. “They are told not to hang up, not to speak to anyone, and to deposit cash quickly to avoid legal trouble,” Prado said.
Brown emphasized that AI has significantly enhanced the sophistication of these scams. “You’re not seeing those punctuation errors,” he said. “The phishing materials look professional, and deepfake videos can now convincingly impersonate known figures.”
Cross-Industry Collaboration Needed to Combat AI Scams
Panelists agreed that the rise of AI-powered scams requires a comprehensive, cross-industry response. Brown recommended that firms use FINRA Rule 2165, which allows temporary holds on suspicious account activity. He also urged financial institutions to leverage the FINRA Securities Helpline for Seniors, which has recovered over $9 million in lost funds since its launch.
Ambrose pointed out that scams are not just targeting seniors but also midlife professionals and tech-savvy investors. “The biggest losses I’ve seen involve people who thought they were making legitimate crypto investments. They transferred funds from a secure wallet to a fraudulent platform, believing they were earning returns,” she said.
The panelists also stressed the need for financial institutions to integrate fraud prevention measures across multiple departments, including fraud detection, customer service, and IT security. “Fraud is no longer just a compliance issue—it’s a multi-departmental challenge that requires real-time intervention,” Prado noted.
FAQ Section:
Q1: How are scammers using AI to target crypto investors?
AI is being used to create realistic phishing emails, deepfake videos, and impersonation calls that are difficult to distinguish from legitimate communications. This makes it easier for scammers to deceive victims into transferring funds or revealing sensitive information.
Q2: What measures can smaller firms implement to prevent fraud?
Smaller firms can adopt “smart friction” tactics, such as additional verifications before crypto withdrawals, and utilize third-party monitoring services to flag unusual behavior. They should also educate clients about common scam tactics and provide clear instructions on how to verify legitimate communications.
