AI Drives Surge in Cryptocurrency Fraud Schemes, IRS Investigators Warn
By Anna Schecter, Senior Coordinating Producer, Crime and Public Safety Unit, CBS News
April 23, 2026
In recent years, artificial intelligence (AI) has been embraced across countless industries, but its dark side is now fueling a dramatic rise in cryptocurrency fraud, according to investigators with the IRS Criminal Investigation unit. Sophisticated scammers are using AI-powered tools to manipulate victims and steal billions of dollars, often leaving their targets financially devastated.
Victim’s Life Savings Vanish Into Crypto Void
Kyle Holder, a 73-year-old retired occupational therapist, is one of thousands of Americans who fell prey to these high-tech cons. Over the course of less than three months, the scammers emptied Holder’s lifetime of savings — nearly $300,000 — from her retirement and personal accounts, funneling the funds into cryptocurrencies that are notoriously difficult to trace. Holder now lives in an assisted living facility paid for by Medicaid and laments the loss of the nest egg she had worked decades to build.
“There’s nothing left,” Holder said during an interview on a local park bench near her Long Island facility. “I wanted to have something to leave to my children, but it’s all gone.”
The Scam Unfolded Through Personalized Interaction
The fraudulent scheme began in late 2024 with a message via WhatsApp— a popular messaging app Holder used regularly to keep in touch with family and friends across the U.S., Canada, and Israel. The message offered coaching on how to invest in cryptocurrency, an intriguing prospect for Holder, who was seeking new ways to support herself following an injury that ended her career.
Holder responded and soon found herself communicating with a woman who identified herself as “Niamh.” The scammer crafted a convincing narrative, portraying herself as a single parent with financial struggles similar to Holder’s own background. She frequently asked personal questions, building a rapport and gaining Holder’s trust.
Their exchanges became increasingly personal and intimate. “Honey, how did you sleep last night?” Niamh would ask in messages, encouraging Holder to stay engaged. Eventually, Niamh and an accomplice, posing as a customer service representative, guided Holder onto crypto platforms and coached her to open two digital wallets.
Initially, Holder transferred a small amount, which was rapidly followed by the appearance of thousands of dollars in her crypto account, fueling her hopes that the investment opportunity was real. Niamh assured her that taxes would be paid on their earnings, reinforcing her belief in the legitimacy of the operation.
A Harrowing Spiral of Loss and Deception
As the months passed, Holder transferred increasing amounts, ultimately sending nearly $300,000 to a series of 14 different cryptocurrency wallets controlled by the scammers. When expected returns failed to materialize, Holder’s concerns mounted.
“Please assure me this is not a scam,” Holder admitted in a message to Niamh. Niamh blamed the disappearance of funds on a “mistake” in transferring money to the wrong wallet, then redirected Holder to “customer service” for help—where the tone quickly turned intimidating.
“You have made a fatal mistake,” one message warned.
Distraught and overwhelmed, Holder struggled mentally and physically. She experienced profound despair and difficulty even getting out of bed. Social services intervened, and local police transported her to a hospital. Eventually, Medicaid covered her move to an assisted living facility, where she now shares a small room.
AI Enables Highly Targeted, Difficult-to-Trace Scams
The IRS Criminal Investigation’s New York Field Office received Holder’s case. Their agents painstakingly mapped out the intricate network of wallet transfers. Investigators determined that the scammers consolidated funds from multiple victims, mixing them in an effort to frustrate tracking efforts before funneling crypto assets through exchanges to effectively “cash out” more than $5 million without detection.
Special Agent in Charge Harry Chavis explained how the criminals employed AI and dark web tools to enhance the precision and efficiency of their attacks.
“Criminals can buy lists of potential victims — people who have already been targeted or whose data has been leaked. Then they use AI-powered scripts to tailor communications specifically for the victim,” Chavis said. “It’s a new level of sophistication.”
The agents noted that the dark web marketplace offers AI tools that enable scammers to write personalized messages, making fraud attempts harder to spot and more convincing.
Warning and Advice From Investigators
Despite the rising threat, there are steps people can take to protect themselves. Chavis advises slowing down and verifying any unexpected financial communication before acting. “If you receive a communication from a company or entity, contact them through official channels to confirm its legitimacy before clicking any links or transferring funds,” he said. “Urgency is a tactic scammers use to pressure victims.”
He also emphasized the importance of reporting suspected scams quickly. “The sooner victims report, the better the chances we have to trace the perpetrators and potentially recover funds.”
To support victims, the IRS Criminal Division has established an online tipline for reporting AI-enabled crypto scams.
The Broader Impact
The FBI estimates that Americans lost approximately $20 billion to cyber thefts in 2025, with over half of that involving cryptocurrencies. Holder’s story is just one example of the widespread, personal harm these scams cause.
Holder’s hopes now rest on law enforcement’s ability to trace the scammers across borders. “They could be anywhere in the world,” Chavis said.
Meanwhile, Holder reflects on the devastating loss. “This was my future, gone in a blink,” she said. “I want others to be warned.”
What to Do if You Suspect a Crypto Scam
- Slow down and verify the sender’s identity through official channels.
- Never transfer funds or disclose personal information without double-checking.
- Report suspicious activity immediately to the IRS tipline and local authorities.
- Stay informed about emerging scams and cybersecurity practices.
For more information or to report a crypto scam, visit the IRS Criminal Investigation tipline.
This report was contributed to by Laura Geller.
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