Kraken Pilots Eightco's AI-Resistant INFINITY Authentication to Combat Deepfake Fraud

Kraken has joined a pilot program for Eightco's INFINITY authentication platform, focusing on addressing regulatory compliance and AI-enabled fraud challenges in the crypto sector. The exchange, which holds 12 regulatory registrations and licenses including FinCEN in the U.S. and FINTRAC in Canada, requires all users to complete KYC verification to comply with anti-money laundering rules. This move comes as the EU's Transfer of Funds Regulation, implementing the crypto Travel Rule, took full effect on December 30, 2024, mandating that crypto asset service providers include sender and receiver information with transactions.

AI-enabled fraud has become a significant threat, with synthetic identity fraud accounting for 28% of fraudulent crypto exchange registrations in 2024 and approximately 60% of deposits into scam wallets involving AI technology. Deepfakes and other AI-generated methods challenge traditional KYC processes that rely on government-issued IDs and biometric checks. INFINITY, described as a "trust layer," embeds authentication within applications to verify human identity at scale, rather than treating it as a separate checkpoint. However, technical specifics of how it achieves AI resistance were not disclosed, and Kraken has not revealed the pilot's duration or evaluation criteria.

Eightco's backers include BitMine, World Foundation, Wedbush, Coinfund, FalconX, Kraken, Pantera, GSR, Brevan Howard, and notably Worldcoin ($WLD) as a key investor. Dan Ives, Chairman of Eightco, stated, "Authentication is the missing trust layer in enterprise AI," emphasizing INFINITY's role in securing financial services, a $35 trillion market, and crypto treasuries managing nearly $500 billion in assets. Arjun Sethi, Co-CEO of Kraken, added that INFINITY helps distinguish "what is real from what is generated," aiming to integrate human verification across digital finance layers. The platform plans to expand into gaming, e-commerce, energy, and healthcare, though no timelines were provided.

Despite the potential benefits, questions remain about integration costs, interoperability with existing KYC infrastructure, and user experience impacts. Kraken already allocates over 25% of its workforce to compliance, and additional authentication layers could increase operational overhead without direct revenue generation.