Crypto and AI deepfakes pose growing cybersecurity threats to India’s financial sector

Cybercriminals are moving beyond Bitcoin to privacy-focused cryptocurrencies for illicit transactions, while also ramping up attacks on crypto exchanges that hold substantial digital assets, the 2024 Digital Threat Report has warned in its findings

Cryptocurrency has emerged as a major cybersecurity concern for India’s financial sector, according to the newly released  Report 2024. Jointly published by the Indian Computer Emergency Response Team (CERT-In), the Computer Security Incident Response Team in the Finance Sector (CSIRT-Fin), and global cybersecurity firm SISA, the report offers a comprehensive outlook on evolving digital threats targeting the Banking, Financial Services, and Insurance (BFSI) industry.

The report highlights how cryptocurrencies are increasingly being exploited by cybercriminals to launder funds, mask transaction origins, and evade detection. Unlike traditional banking channels, digital currencies provide anonymity that is difficult to trace, with privacy-focused coins like Monero (XMR) posing a particular challenge due to their advanced encryption capabilities.

While Bitcoin was once the currency of choice for illicit transactions, threat actors are now turning to lesser-known alternatives that offer greater transactional privacy. The report also warned of rising attacks on cryptocurrency exchanges as cybercriminals shift focus to platforms holding significant reserves of digital assets.

Recent breaches underscore the scale of the threat. Indian crypto exchange WazirX reportedly suffered losses exceeding $230 million, while Dubai-based Bybit was hit by a record-breaking $1.5 billion theft, making it one of the largest cryptocurrency heists to date.

AI-powered fraud hits hard

Beyond crypto, the report identifies artificial intelligence-driven threats—particularly deepfakes and prompt hacking of large language models (LLMs)—as growing risks. Sophisticated voice and video deepfakes are being used to impersonate company executives, tricking employees into authorizing fraudulent transactions or disclosing sensitive credentials.

The report also warned about the misuse of generative AI tools like WormGPT and FraudGPT, which are being leveraged to write realistic phishing emails, generate polymorphic malware, and bypass traditional security filters.

To counter these threats, the report urges financial institutions to adopt AI-powered anomaly detection systems and expand security testing to include APIs in AI-native applications. It also calls for clearer AI regulations focused on data protection, ethical use, and algorithmic transparency to ensure safe integration of machine learning technologies within the BFSI sector.

By mapping the current threat landscape and offering actionable recommendations, the Digital Threat Report 2024 aims to help the industry build more resilient cyber defenses and prepare for the next wave of digital threats.