Over One-Third of Crypto Companies Lose More Than $500,000 Each to Deepfake Fraud

Image: Regula's survey shows that, while average industry losses from deepfake fraud sit at $440,000, 37% of Crypto companies are losing over $500,000.

\ RESTON, Va — A new “Deepfake Trends 2024” study by Regula, a global developer of forensic devices and identity verification solutions, highlights the pressing financial challenges posed by deepfakes to the Crypto industry. The study reveals that while the industry averages a loss of $440,000 due to advanced fraud techniques, a significant portion – 37% of Crypto companies – are facing losses exceeding half a million dollars each.

\ Deepfakes, which manipulate audio and video to create convincing yet fraudulent content, have become a major concern for more than half of the organizations in the Crypto sector. According to the study, 53% of businesses in the industry have encountered incidents of video deepfakes. Notably, the Crypto firms are particularly vulnerable to audio deepfake fraud, with 57% of respondents reporting such incidents, compared to 50% in other sectors. This heightened susceptibility may stem from the industry’s reliance on specific verification methods.

\ The study identifies multifactor authentication (MFA) as the most widely employed mitigation strategy, utilized by 57% of respondents. In contrast, other industries often prefer biometric verification as their top choice. Audio verification is one of the components within MFA, enabling users to confirm their identity through various methods, such as a password, text message code, and their voice.

\ The impact of deepfake fraud on the crypto industry extends beyond immediate financial losses. Organizations face substantial costs, with 35% of respondents citing legal expenses as a significant burden. Penalties and fines were reported by 33% of organizations, reflecting financial repercussions from regulatory violations or legal settlements. Additionally, 27% of respondents acknowledge reputational risk as a key concern, highlighting the potential damage to trust and credibility that deepfake incidents can cause.

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“Losing $500,000 to a single type of fraud is staggering for any organization, especially in a fast-paced industry like Crypto,” said Henry Patishman, Executive Vice President of Identity Verification Solutions at Regula. “This finding underscores the need for robust security measures, grounded in best practice. As the threat landscape evolves, it’s crucial for companies to adopt a liveness-centric approach, focusing on real-time verification of people and only physical objects.”

\ Find more insights on deepfake fraud in the survey report. Read the full version on our website.

\ Additional resources:

\ ●  Identity Fraud Statistics 2023: How Businesses Respond to the Issue

●  Data from 2022: One-Third of Global Businesses Already Hit by Voice and Video Deepfake Fraud

●  Financial Organizations Challenged by the Growing Community of Digital Nomads

●  The Anatomy of ID Document Liveness Detection

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:::info The research was initiated by Regula and conducted by Sapio Research in August 2024 using an online survey of 575 business decision-makers across the Financial Services (including Traditional Banking and FinTech), Crypto, Technology, Telecommunications, Aviation, Healthcare, and Law Enforcement sectors. The respondent geography included Germany, Mexico, the UAE, the US, and Singapore.

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Regula is a global developer of forensic devices and identity verification solutions. With our 30+ years of experience in forensic research and the largest library of document templates in the world, we create breakthrough technologies in document and biometric verification. Our hardware and software solutions allow over 1,000 organizations and 80 border control authorities globally to provide top-notch client service without compromising safety, security or speed. Regula was repeatedly named a Representative Vendor in the Gartner® Market Guide for Identity Verification.

\ Learn more at www.regulaforensics.com.