Law enforcement agencies face a widening technological disadvantage as criminals increasingly leverage artificial intelligence for financial crimes, according to industry experts who spoke during a BeInCrypto Market Intelligence Council panel.
Sol Cinosi of Recoveris and Nick Pailthorpe of Kodex highlighted that while bad actors use AI daily to scale operations, draft flawless phishing communications, clone voices, and generate deepfakes, investigators in many jurisdictions are restricted or hesitant to adopt similar tools.
Data from the Chainalysis 2026 Crypto Crime Report indicates that cryptocurrency scams accounted for an estimated $17 billion in 2025. Furthermore, scam operations with on-chain links to AI vendors extracted an average of $3.2 million each—4.5 times the amount taken by operations without those links.
Cinosi, a former prosecutor who now oversees government and corporate affairs at Recoveris, identified law enforcement's lag in AI adoption as a primary concern. Beyond formal regulatory bans in certain jurisdictions, Cinosi noted that many investigators fear using AI tools due to unclear policies or the assumption that they lack permission.
Europol’s IOCTA 2026 report characterizes this disparity as a "velocity gap," emphasizing that enforcement depends on closing the technological divide. Meanwhile, blockchain tracing technology has advanced significantly, allowing investigators to track funds across blockchains, bridges, and mixers with high confidence. Experts emphasize that AI serves as a crucial force multiplier, helping parse massive volumes of data to overcome a global shortage of experienced blockchain investigators.
Pailthorpe, a former UK police officer with two decades of experience, observed that cryptocurrency increasingly surfaces across diverse criminal investigations, including counterterrorism and human trafficking. While training initiatives and educational materials from platforms like Kodex aim to assist officers encountering crypto wallets in the field, the ultimate outcome of the technological arms race may depend on whether policy evolves to permit investigators to utilize the same tools as their adversaries.
