Crypto Firms Shift Gears on Security as AI Fraud Rises

Shift Away from Traditional Methods

Crypto firms are rethinking their security strategies, moving away from traditional methods like multi-factor authentication (MFA). This shift is driven by the rise of AI-powered fraud, with only 28% of crypto firms now relying on MFA as their primary defense. Instead, they are turning to other measures such as:

• IP and geolocation analysis
• Dark web monitoring

The Gap in Current Methods

The problem lies in the focus on access signals rather than the actual identity of the user. This gap is making it easier for fraudsters to exploit:

• Biometric data
• Fake documents

Biometric fraud and document fraud are the most common types of identity verification fraud, each reported by 35% of crypto firms.

The Challenge of AI Fraud

As AI fraud becomes more sophisticated, the limitations of login-based security are becoming more apparent. Synthetic identities and manipulated media can mimic legitimate user behavior, making it difficult to distinguish between real users and fraudsters.

Continuous Identity Verification

Crypto firms are realizing that identity verification needs to be a continuous process, not just a one-time check. They are investing in:

• Biometric verification (stronger proof of a real person's presence)
• Human expert review (for high-risk cases)
• Orchestration of multiple identity verification (IDV) tools (connecting signals across different systems)

The Future of Identity Proofing

The goal is to create a unified, trusted narrative of who the user really is. This is seen as the foundation for operating safely in the future. The focus is on deeper, more continuous identity proofing, including:

• Biometrics
• Stronger document validation
• Better orchestration