The Ripple Effect: Crypto Companies Grapple with a 70% Surge in Deepfake Fraud

In its “State of Verification and Monitoring in the Crypto Industry 2023” report, Sumsub, a full-cycle verification platform, has provided a comprehensive analysis of the current landscape of regulations and verification practices for crypto companies. The report incorporates insights from a survey conducted among more than 100 crypto companies, as well as expert interviews within the industry. Through the aggregation and anonymization of data, Sumsub’s report sheds light on the increasing sophistication of fraud patterns and attacks, the rise of deepfakes, and the transition from document-based verification to Non-Doc Verification solutions. This report aims to provide crypto businesses with valuable information to enhance user experience, improve operations, and adapt to the evolving industry demands.

## The Growing Threat of Fraud

One of the key findings of Sumsub’s report is the alarming increase in fraud within the crypto industry. A staggering 77% of crypto companies reported encountering new fraud patterns and schemes in 2023. These attacks are not only becoming more frequent but also more professional in nature. The rise of sophisticated fraudulent tactics poses a significant threat to the crypto industry and necessitates the implementation of robust security measures.

## The Deepfake Challenge

The report highlights the growing concern surrounding deepfakes as a favored tool among fraudsters in the crypto industry. Approximately 70% of crypto companies reported observing an increase in the popularity of deepfakes among fraudulent activities. Deepfakes refer to manipulated media, particularly images and videos, that convincingly simulate real and credible footage. This technology poses a significant challenge for the industry, as it becomes increasingly difficult to differentiate authentic content from manipulated material.

Notably, the report reveals that deepfakes in the crypto industry increased by 128% in 2023 compared to the previous year. This substantial rise in deepfake usage underscores the need for vigilant verification processes and sophisticated fraud detection mechanisms to protect both businesses and users.

## The Shift to Non-Doc Verification

Sumsub’s report emphasizes an ongoing shift within the crypto industry from document-based verification to Non-Doc Verification solutions. Non-Doc Verification solutions offer faster and more streamlined verification processes, with verification times decreasing by almost half from 2022 to 2023 across all regions. Providers are increasingly adopting these solutions to meet user expectations for quicker onboarding while complying with stringent regulations.

By leveraging Non-Doc Verification, crypto companies eliminate the need for users to upload any documents during the onboarding process. This not only expedites the verification journey but also enhances pass rates and safeguards against the threat of synthetic fraud. Specifically, the report notes that verification times can be as fast as five seconds in Brazil and three seconds in Ghana, exemplifying the efficiency and effectiveness of Non-Doc Verification solutions.

## Editorial and Advice

The findings of Sumsub’s “State of Verification and Monitoring in the Crypto Industry 2023” report highlight the growing challenges faced by the crypto industry in terms of fraud prevention and user verification. As the industry evolves, the need for heightened security measures becomes paramount. Crypto companies must remain proactive in adopting advanced technologies and innovative solutions to combat the increasing sophistication of fraudulent activities.

The rise of deepfakes in the crypto industry serves as a stark reminder of the urgent need for improved verification protocols. It is crucial for companies to invest in robust fraud detection mechanisms that can effectively identify and mitigate the risks posed by deepfake technology. Furthermore, ongoing research and development efforts must be dedicated to refining deepfake detection algorithms to keep pace with evolving fraudulent tactics.

The transition towards Non-Doc Verification solutions is a significant step in enhancing the efficiency and user experience within the industry. However, it is imperative for crypto companies to strike a balance between expediting onboarding processes and maintaining strict compliance with regulatory requirements. Companies must continually evaluate the effectiveness of their verification systems to ensure they not only meet industry demands but also address potential vulnerabilities.

Lastly, collaboration and information sharing among crypto companies, industry professionals, and regulators are vital in developing standardized verification practices and staying one step ahead of fraudsters. By leveraging collective expertise and establishing industry-wide best practices, the crypto industry can foster a more secure and resilient ecosystem.

In an environment where trust is paramount, a robust and comprehensive verification framework is essential for the long-term sustainability and growth of the crypto industry. As technology continues to advance, companies must remain vigilant and adaptive, ensuring user security and the integrity of the crypto ecosystem.

### Acknowledgements
Sumsub’s “State of Verification and Monitoring in the Crypto Industry 2023” report provides valuable insights into the challenges and trends within the industry. The aggregated and anonymized data presented in the report offers a comprehensive understanding of the evolving landscape of crypto verification.