Kraken Tests AI-Proof Identity System — Can Crypto Beat Deepfake Fraud?

Kraken has joined a pilot program for Eightco’s INFINITY authentication platform, addressing challenges related to regulatory compliance and AI-enabled fraud.

The exchange has not disclosed the pilot’s duration or evaluation criteria.

Exchanges Face Evolving Compliance Requirements

Kraken maintains 12 regulatory registrations and licenses, including Money Services Business registration with FinCEN in the US and FINTRAC in Canada. All platform users must complete the KYC (Know Your Customer) verification to comply with anti-money laundering regulations.

The EU’s Transfer of Funds Regulation, implementing the crypto Travel Rule, took full effect on December 30, 2024. The regulation requires crypto asset service providers to include sender and receiver information with transactions. While Kraken’s pilot focuses on US operations, authentication challenges span multiple jurisdictions with varying requirements.

The timing coincides with increased regulatory scrutiny of crypto platforms following several high-profile enforcement actions in 2024 and early 2025.

AI-Enabled Fraud Targets Identity Verification

According to blockchain analytics firms, synthetic identity fraud, which uses AI to generate legitimate-appearing profiles, represented 28% of fraudulent crypto exchange registrations in 2024. An estimated 60% of deposits into scam wallets involved scams utilizing AI technology.

Deepfake technology enables the creation of synthetic identities and voices that bypass traditional document verification and biometric checks. The methods challenge existing KYC processes that rely on government-issued identification and facial recognition.

INFINITY operates as what Eightco calls a “trust layer” for verifying human identity across systems. The company states that the platform embeds authentication within applications rather than treating it as a separate verification checkpoint.

The announcement did not detail the technical specifics of how INFINITY achieves AI resistance. Eightco did not respond to requests for additional technical documentation by publication time.

According to the company, the platform targets the financial services sector, which represents approximately $35 trillion in global assets, and crypto treasuries, which approach $500 billion in assets under management. However, adoption rates for new authentication technologies in these sectors typically span multiple years.

Funding and Market Position

Eightco’s backers include BitMine, World Foundation, Wedbush, Coinfund, FalconX, Kraken, Pantera, GSR, and Brevan Howard. The company maintains what it describes as a Worldcoin treasury among its digital asset holdings.

“Worldcoin $WLD is listed as a key backer,” noted SamAltcoin_eth on X, referencing the company’s investor relationships.