India warns of AI-powered attacks targeting crypto exchanges - Digital Watch Observatory

India's national cybersecurity agency has warned that an AI-assisted hacking campaign targeting cryptocurrency exchanges and other financial institutions is escalating, with attackers stealing wallet keys and draining funds. In its latest advisory, the Indian Computer Emergency Response Team (CERT-In) identified the threat actor as 'CRAFTY FALCON', updating an earlier warning issued in October to explicitly include cryptocurrency exchanges among the affected businesses.

Attack Methods

According to CERT-In, the attackers use AI to identify vulnerabilities, generate attack scripts, and develop tailored exploits. The campaign has targeted non-bank financial companies, digital lending platforms, fintech companies, payment aggregators, and service providers, as well as crypto exchanges.

Attackers reportedly gained access through vulnerable applications, exposed testing environments, and compromised credentials before moving into production systems and exploiting payment and disbursement APIs.

Impact and Response

The agency also reported incidents involving stolen cryptocurrency wallet keys and unauthorized transfers, with some attackers conducting small test transactions before moving larger amounts. Certain attacks were deliberately timed for weekends and holidays to take advantage of reduced security coverage.