Digital Fraud Rivals Cocaine Trade; Power Shifts in the Underground Economy

The expansion of artificial intelligence, the emergence of underground markets for criminal services, and the development of cryptocurrency-based financial infrastructure have created conditions allowing fraud networks to operate at lower cost and greater speed.

According to Mehr reporter; The global economy of digital fraud is experiencing a transformation whose dimensions go beyond the increase in the number of cybercrimes. The expansion of the use of artificial intelligence, the formation of underground markets for the supply of criminal services, and the development of cryptocurrency-based financial infrastructure have provided conditions for organized fraud networks to operate at a lower cost, faster, and less dependent on physical infrastructure. In this regard, the Bloomberg research report, published on October 10, 2026, shows that these developments have gradually transformed the traditional structure of organized fraud into a fragmented, flexible and transnational industry.

The Global Anti-Scam Alliance estimates that fraud victims in 42 countries will suffer a total of $442 billion in losses by 2025. This figure exceeds some estimates of the value of global cocaine trade. This figure represents the damage in the investigated countries and it should not be considered equivalent to the definite financial turnover of all fraud networks in the world. However, the extent of damages shows that digital fraud has become one of the most important challenges of economic security and cyberspace governance.

Fraud industry from centralized networks to criminal services market

The traditional pattern of operation of large fraud networks, especially in Cambodia and Myanmar, was based on the creation of closed complexes and the extensive use of manpower. Using fake identities, fake emotional relationships and unrealistic investment offers, these centers lured victims to transfer assets through long processes. Bloomberg's field research in one of these closed centers in Cambodia shows that these activities had a clear organizational structure, a performance-based payment system, and training guidelines. In some cases, employees received up to eight percent of the fraud's revenue as commissions.

Police and judicial pressures against these centers have led to a change in the activity pattern of criminal networks. For example, during the extensive operation of the Cambodian government, about 250 thousand foreign nationals left this country. However, the collected evidence shows that some of the criminal activities have been transferred to apartments, hotels and even cars. The discovery of an investment fraud network on the 18th floor of a residential building in Nairobi is an example of the geographical expansion of these activities outside of Southeast Asia.

The determining factor in this shift is the formation of the digital supply chain of criminal services. Fraud networks can now procure stolen personal data, ready-made accounts, fake websites, impersonation software, and money laundering services from independent vendors. This division of labor has reduced the cost of entering the fraud market and has made it possible to quickly restore activities after the intervention of law enforcement agencies.

Artificial intelligence and the collapse of technical barriers to entering the fraud market

The most important role of artificial intelligence in this evolution is to reduce the technical skills and human resources needed to carry out fraud operations. Automated content generation tools, simultaneous translation, face spoofing, and code generation have made it possible to design persuasive scenarios and create infrastructures of deception for people who previously lacked the necessary technical ability.

The investigation of the cyber security company "ZeroFox" shows that the number of phishing pages detected in the free levels of 9 software development platforms and artificial intelligence-based program creation tools has more than quadrupled in two years and reached 10,600 pages. These pages have been used to impersonate banks, stores, telecommunications companies and financial services. The importance of this finding is that legitimate software development tools have found the ability to be exploited in phishing operations without the need for a dedicated criminal infrastructure.

The economy of these services has also become highly competitive. Some exploit tools come with a monthly subscription of $500, according to Bloomberg report findings. In other words, mass sending messages to 10,000 email addresses costs only one dollar, and basic phishing services can be obtained for less than $100. Also, simultaneous translation services with a monthly cost of less than 20 dollars have facilitated the possibility of connecting fraud networks with victims belonging to different countries.

In such a situation, artificial intelligence increases the productivity of criminal operations by reducing the cost of producing fake content and increasing the capacity of personalizing messages. The result of this development is the possibility of simultaneously executing a greater number of fraud scenarios with fewer resources.

Underground markets and the formation of the transnational crime supply chain

The case of the Chinese-language platform "Xinbi Guarantee" is a clear example of the organization of the underground economy of digital fraud. According to a Bloomberg report and a review of blockchain data by Chainalysis, this market had processed about $24 billion in transactions before US authorities took action against Telegram channels and its cryptocurrency wallets in September 2026.

Analysis of the financial flows of this collection reveals the connection between the suppliers of stolen data, account registration services, website design, deepfake software and money laundering networks. In examples of detected transactions, one buyer paid $834 to receive data, and another buyer transferred $9,150 to a vendor of artificial intelligence and deep forgery software.

The importance of these markets lies in the ability to quickly replace suppliers and their communication channels. Reports indicate that some sellers moved their business to other channels after Xinbi Guarantee was shut down. Such a structure ensures that the closure of a market does not necessarily lead to the cessation of related criminal services, and active networks can continue to operate through alternative routes.

The globalization of fraud and its connection with human trafficking

The geographical expansion of fraud networks has also had direct consequences for dealing with human trafficking. Data provided by Interpol shows that the number of nationalities identified among people caught in fraud centers has reached 89 nationalities, and this figure has increased more than five times compared to the beginning of 2023.

This evolution indicates the expansion of the recruitment of human resources and victims of exploitation in criminal networks. In some centers, people are forced to carry out fraud operations. Therefore, it is very important to recognize the legal status of the arrested persons. Alison Pitlock, director of the Stimson Center's cyber program, has emphasized the need to investigate the status of employees of these centers as possible victims of human trafficking.

The Nigerian experience also shows the gradual transfer of some activities to local labor markets. In the 2024 operation in Lagos, more than 700 suspects were detained in a five-story facility. Reports indicate that Chinese managers cooperate with local forces and use artificial intelligence-generated identities in this complex.

The crisis of responsibility of platforms and the inefficiency of case-by-case confrontation

The proliferation of digital fraud has put technology companies and financial institutions under increasing pressure. For example, Meta has announced that it has removed more than 16 million accounts linked to digital fraud centers on Facebook and Instagram by 2025. The company also removed 65 million fraudulent ads, 94% of which were detected before users reported them.

However, the speed with which alternative accounts are created limits the effectiveness of ad hoc measures. In the financial field, banks are also faced with the difficult issue of transactions that victims of fraud personally approve. British banks paid out £354.3 million to victims of authorized money transfer fraud last year, while the total amount stolen through payment fraud reached £1.28 billion, according to data from UK Finance.

The Singapore government has also provided an example of an attempt to redistribute the responsibility of prevention and compensation among the actors of the digital service chain by adopting the joint responsibility framework of banks and telecommunication companies. This approach indicates that digital fraud regulation is gradually moving from focusing on prosecuting perpetrators to setting preventive duties for infrastructure providers.

The need to review the architecture of dealing with digital crimes

Finally, recent developments show that artificial intelligence is changing the operational economics of organized crime. Reducing the cost of producing deception tools, expanding the supply markets of criminal services and the possibility of rapid transfer of activities between countries has increased the capacity to rebuild fraud networks and the enforcement measures limited to closing centers or deleting user accounts face the challenge of effectiveness.

The most important political implication of this situation is the need to focus on the supply chain and economic infrastructure of fraud. Effective countermeasures will require the simultaneous cooperation of judicial institutions, international police, financial institutions, digital platforms, and communication service providers to identify data supply networks, impersonation tools, and pathways for the transfer of criminal proceeds. Besides that, determining the proportional responsibility of digital actors and separating the perpetrators from the victims of human trafficking should be considered in the design of legal mechanisms.

A continuation of the current trend could lead to the consolidation of a market where access to criminal services is as easy as access to conventional digital tools. The main issue for governments is to create the ability to intervene in the economic and technological infrastructures that enable the continuous proliferation of these crimes.