Experts from Cato Networks have discovered that criminals are now using artificial intelligence-based software to bypass Know Your Customer (KYC) procedures on cryptocurrency exchanges. According to a report, a tool called ProKYC demonstrates a new level of sophistication in crypto fraud, far surpassing older methods of bypassing two-factor authentication and KYC.

How ProKYC Works

Instead of using fake documents, fraudsters are now creating entirely new identification data with the help of artificial intelligence. ProKYC enables the generation of videos and photos to pass the facial recognition procedures on crypto exchanges. This tool is specifically designed for platforms where KYC includes matching the face from a webcam with a government-issued ID.

Example of Use

In a video published by experts, a user inserts an AI-generated face into a template of an Australian passport, then creates a video and photos to bypass the KYC process on the Bybit exchange. ProKYC is available via subscription for $629 per year and can be used not only on cryptocurrency exchanges but also on platforms like Stripe and Revolut.

Risks and Protection Methods

Fraudsters can create new accounts on cryptocurrency exchanges and other financial platforms using such technologies. Cato Networks’ Chief Security Strategist, Itay Maor, pointed out that combating this type of fraud is becoming increasingly difficult:

“Creating overly restrictive biometric authentication systems can lead to numerous false positives. On the other hand, weak control is a path to fraud.”

There are methods to detect the use of AI tools, including manual checks of high-quality images and videos, as well as identifying discrepancies in facial movements. However, the scale of the problem is growing, which complicates security efforts.

Other Cases

Earlier, in June, Binance blocked 297 fraudulent accounts as part of the Megadrop program, where users were purchasing KYC-completed accounts to obtain rewards in bulk.