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A new AI-powered deepfake tool called ProKYC is raising alarms in the crypto world, according to cybersecurity firm Cato Networks. 

The tool allows cybercriminals to bypass high-level Know Your Customer (KYC) measures on crypto exchanges, showcasing a new level of sophistication in crypto fraud.

ProKYC, which was detailed in an Oct. 9 report, enables fraudsters to create entirely new identities instead of relying on forged documents. 

It's specifically designed to target crypto exchanges and financial firms that use webcam pictures for facial recognition against government-issued IDs.

In a demonstration video, ProKYC generates fake ID documents and deepfake videos to pass facial recognition checks on the Dubai-based crypto exchange Bybit. 

The tool offers a package that includes a camera, virtual emulator, facial animation, fingerprints, and verification photo generation for $629 annually.

Cato Networks' chief security strategist Etay Maor highlighted the challenge of detecting and safeguarding against this new breed of AI fraud. 

Overly strict systems can lead to false positives, while lax controls risk letting fraudsters through.

Despite these concerns, there are potential detection methods, such as manual identification of unusually high-quality images and videos, and inconsistencies in facial movements and image quality. 

The penalties for identity fraud in the U.S. can be severe, with up to 15 years imprisonment and heavy fines.

In September, Gen Digital, the parent company of Norton, Avast, and Avira, reported an increase in crypto scammers using deepfake AI videos to lure victims into fraudulent token schemes.

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