Crypto scams pulled in an estimated $17 billion in 2025, and the law enforcement agencies chasing them are falling behind because many can't or won't use the AI tools criminals have embraced. Scammers are deploying voice cloning, deepfakes, and automated phishing at scale, while some agencies are banned from using AI and others have no policy at all.
The AI crime gap
Sol Cinosi of Recoveris raised the alarm during a BeInBlockCrypto panel on crypto crime this month. His biggest concern isn't what criminals are building — it's that police aren't adopting the same technology. Some jurisdictions forbid investigators from using AI tools; others have no clear guidance, leaving officers unsure what they're allowed to run.
Europol's IOCTA 2026 report describes the enforcement problem as a "velocity gap" that has to be closed with technology. The phrase captures the core issue: criminals move at the speed of automated tools, and investigations still move at the speed of manual review.
What the numbers show
Chainalysis's 2026 Crypto Crime Report puts total crypto scam losses at roughly $17 billion in 2025. The more striking figure is how much AI helps the bad guys: scam operations with on-chain links to AI vendors extracted about $3.2 million each — about 4.5 times more than similar scams that didn't use AI.
That matches what investigators say on the ground. AI makes scams cheaper to run and more profitable. A single operation can target far more victims with less effort, which is exactly why the enforcement gap is so damaging.
Why police hesitate
Cinosi said many investigators are afraid to use AI tools, assuming they lack permission even when they already have it. That hesitation slows cases down and pushes trained staff to burn time on tasks a machine could handle in seconds.
Experienced blockchain investigators are scarce, and AI won't replace them. What it does is process large data sets and spot patterns fast, leaving the human judgment to the people who have it. The capacity problem is real — and AI is the cheapest fix available.
Better tracing, uneven training
On the technical side, tracing has improved significantly. Funds can now be followed across blockchains, bridges, and mixers, which was nearly impossible a few years ago. But the human side hasn't caught up.
Nick Pailthorpe of Kodex says crypto shows up in counterterrorism and human trafficking investigations, not just crypto fraud cases. He sees investigators run into a wallet and not know what to do next — a training gap that industry is trying to fill with webinars, police station visits, and educational material from exchanges.
Pailthorpe said he's confident in many police agencies despite the challenges. The real test is whether agencies close the velocity gap before the next year's crime numbers arrive.
