Tech
Elon Musk’s deepfake crypto scam highlights risks to Hong Kong as AI fraud rises
Last week, Hong Kong Securities and Futures Commission (SFC) has warned of a scam using deepfakes of Elon Musk advertising a cryptocurrency trading platform called “Quantum AI.” The scam is old, but highlights an alarming increase in the use of artificial intelligence (AI) commit fraud – and Asia has proven particularly vulnerable.
In its May 8 public warning, the SFC said quantum AI claims to be capable of earning “too good to be true” returns, and the regulator submitted a request to Hong Kong’s police force Kong to block access to related services. websites and social media pages. The linked domains were inaccessible as of this week and Facebook groups appear to have been removed.
There have already been numerous cases of deepfake-related fraud in Hong Kong, putting the government on alert. Deepfake incidents in the Asia-Pacific increased by 1,530% last year, with Vietnam and Japan recording the highest number of attacks, according to a report by identity verification platform Sumsub.
“Thanks to the rise of digital financial transactions in the emerging Asian market, there is a larger pool of deepfake targets,” said Penny Chai, vice president of business development at Sumsub in APAC. “As a high volume of instant cross-border transactions takes place in the region, particularly Hong Kong, deepfake fraudsters can exploit the complexity and volume of financial transactions to carry out fraudulent activities.”
A website using the Quantum AI scam describes itself as an “innovative platform” conceptualized by Tesla CEO Elon Musk. Photo: Screengrab
The quantum AI scam dates back at least a year, although it appears to be recycled with different variations used to target different groups.
A video released on Facebook last year, debunked by PolitiFact, showed Musk, the billionaire CEO of Tesla AND SpaceXnext to Jack Ma – co-founder of Holding company of the Alibaba group, owner of the South China Morning Post – promoting the platform. It was edited from a video of Musk and Ma appearing together at the 2019 World Artificial Intelligence Conference in Shanghai.
Another video was edited from an appearance Musk made on conservative pundit Tucker Carlson’s Fox News show, according to Reuters Fact Check.
Some of the domains using the scheme rely on cheap hosting providers and flexible back-end technologies like WordPress. One of the top search results for Quantum AI is a website that says it requires a minimum deposit of $250, accompanied by a warning that users should “only invest what you agree to lose completely.”
Fraud incidents using deepfakes, convincing simulacra of real people using generative artificial intelligence, are on the rise. Sumsub – which tracks incidents of identity fraud, including through the use of deepfakes – found a tenfold increase in the use of deepfakes last year, according to its Identity Fraud report.
Sumsub identified Hong Kong as one of Asia’s top five markets for identity fraud with a rate of 3.3% last year. Bangladesh had the highest rate at 5.4%.
In the first quarter, fintech fraud in Hong Kong grew at a rate of 3.8%, which was 216% faster than the same period a year earlier, Sumsub told the Post.
Deepfakes have already caused tens of millions of dollars in losses in the city.
The SFC has become increasingly aggressive in reporting cryptocurrency-related scams on its website. Of the 29 suspicious virtual asset trading platforms listed by the SFC, 18 warnings were issued this year and 24 of these have been issued since then. JPEX scandal last September.
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‘It’s scary’: Asian cryptocurrency scams leave tens of thousands of brainwashed victims
‘It’s scary’: Asian cryptocurrency scams leave tens of thousands of brainwashed victims
That incident tied cryptocurrency exchange JPEX to losses of around 1.5 billion Hong Kong dollars ($192 million), making it one of the largest financial frauds in the city’s history.
The regulator has also been more active in flagging other suspicious cryptocurrency-related products. On Monday it warned against an investment product called LENA Network that involves cryptocurrency staking, lending and lending arrangements.
Staking arrangements, which require locking a certain amount of cryptocurrencies to validate transactions on a blockchain, could “amount to unauthorized collective investment schemes”, the SFC warned, and “could be highly risky”.