Surge in Fake Crypto Tokens as DeepSeek AI Goes Viral

The worlds of artificial intelligence and cryptocurrency have intersected in intriguing ways this week, with two major developments capturing attention. Privacy-focused AI platform Venice AI, founded by Bitcoin advocate Erik Voorhees, launched its Venice Token (VVV) on Ethereum’s Base network, achieving a $1 billion valuation within hours. Meanwhile, the viral success of Chinese AI firm DeepSeek has spurred a surge in malicious “DeepSeek” scam tokens, highlighting the risks associated with emerging technologies. 

DeepSeek’s Viral Success Sparks Surge in Malicious Crypto Tokens

A recent surge in malicious “DeepSeek” cryptocurrency tokens has raised alarm in the crypto community, mirroring a troubling trend of scammers exploiting trending narratives to deceive unsuspecting users. According to data from the security firm BlockAid, the past 24 hours have seen the creation of at least 75 scam tokens tied to the Chinese AI company DeepSeek, representing a threefold increase from the previous day.

This spike in fraudulent tokens follows the release of DeepSeek’s latest AI app version on Jan. 20, which quickly went viral, climbing to the top of the Apple App Store. While the company’s innovative AI technology has garnered widespread attention, its success has also drawn scammers aiming to capitalize on its newfound popularity.

The surge in scam tokens tied to DeepSeek is reminiscent of the proliferation of fraudulent tokens that followed former US President Donald Trump’s launch of a meme coin on Jan. 18. During that event, the number of Trump-branded tokens skyrocketed from an average of 3,300 daily launches to a staggering 6,800 on the day of the official meme coin debut. Similarly, DeepSeek’s viral AI model has become a new target for crypto fraudsters.

Oz Tamir, a research analyst at BlockAid, highlighted the sophistication of these scams. Scammers have created a decentralized application (DApp) that mimics DeepSeek’s official website. The fraudulent DApp includes a “Connect Wallet” button that, when clicked, could potentially drain a user’s crypto wallet. Tamir emphasized the growing need for vigilance, as scammers refine their methods to deceive even experienced crypto users.

DeepSeek itself has issued clear warnings about the rise of scam tokens. In a pinned post on its X account dated Jan. 10, the company stated, “DeepSeek has not issued any cryptocurrency. Currently, there is only one official account on the Twitter platform. We will not contact anyone through other accounts. Please stay vigilant and guard against potential scams.”

Despite these warnings, scammers have managed to launch and briefly sustain two fake DeepSeek tokens, one of which reached a market capitalization of $48 million before its momentum cooled. Another fraudulent token reached a $13 million market cap, demonstrating the scale and speed with which these scams can attract unsuspecting investors.

The proliferation of scam tokens tied to DeepSeek reflects a broader trend of scammers exploiting viral moments to launch fraudulent cryptocurrencies. According to BlockAid, scammers are becoming increasingly adept at creating fake tokens and exploiting trending narratives. The launch of Official Trump (TRUMP) and First Lady Melania’s meme coin (MELANIA) earlier this month triggered a similar wave of copycat tokens.

This latest incident also shows the interconnectedness of crypto and artificial intelligence in the public imagination. DeepSeek’s rise to prominence stems from the impressive capabilities of its AI model, which the company claims cost under $6 million to develop — a fraction of the billions spent by American tech giants like OpenAI. The company’s viral success has not only drawn attention to its innovative approach but has also made it a prime target for exploitation.

The rapid rise of malicious tokens tied to DeepSeek has caused ripples in the financial markets, with fears of widespread scams contributing to a sell-off in certain sectors. This development comes at a time of heightened scrutiny on both AI and cryptocurrency innovation. On Jan. 23, President Trump signed an executive order revoking past policies that were perceived as barriers to American AI development, signaling the U.S. government’s intent to remain competitive in the global AI race.

David Sacks, a prominent AI and crypto advocate who served in the Trump administration, described DeepSeek’s AI model as evidence of an increasingly competitive landscape. However, the darker side of this competition — the rise of sophisticated scams — has raised concerns about the need for stronger safeguards to protect consumers.

Staying Vigilant Amid the AI-Crypto Convergence

As DeepSeek continues to dominate headlines, the company’s viral success highlights both the potential and the perils of the intersection between AI and cryptocurrency. While innovations like DeepSeek’s AI model showcase the transformative possibilities of technology, the associated surge in scam tokens brings attention to the importance of vigilance in the evolving crypto landscape.

For users, the lesson is clear: always verify the authenticity of cryptocurrency projects before engaging with them. Avoid clicking on suspicious links or connecting wallets to unverified platforms, and rely on official channels for information. As scammers become more sophisticated, the crypto community must remain proactive in protecting itself from exploitation.

Venice AI Launches Privacy-Focused Token on Ethereum’s Base Network, Reaching $1 Billion Valuation in Hours

In a remarkable debut, Venice AI, a privacy-focused artificial intelligence platform founded by Bitcoin pioneer Erik Voorhees, launched its self-titled Venice Token (VVV) on Ethereum’s layer-2 Base network on Jan. 27. Within just two hours of its launch, the token achieved a fully diluted valuation (FDV) exceeding $1 billion, marking a significant milestone in the fusion of blockchain and artificial intelligence technologies.

Data from decentralized exchange tracker DEXScreener reveals that VVV’s FDV climbed to more than $1 billion shortly after 6 PM UTC, less than two hours post-launch. By the end of the day, the token’s FDV had surged further to approximately $1.65 billion, with a circulating market capitalization of $306.4 million. Currently, 25 million tokens out of the total 100 million supply have been released to the public, while the number of token holders has surpassed 13,200, as per Basescan data.

Venice AI’s rapid ascent in value signals strong market interest for its innovative offerings. The platform has positioned itself as a champion of privacy and censorship resistance in the AI space, leveraging blockchain technology to provide secure and private access to generative AI models.

The Venice Token (VVV) serves more than just a financial purpose. According to a statement from the platform on Jan. 27, users who purchase and stake VVV gain free ongoing inference access to its API, enabling private and uncensored generative text, image, and code creation. The API supports models like DeepSeek’s newly released R-1, which has garnered significant attention for its capabilities.

DeepSeek R-1, developed by the Chinese AI firm DeepSeek, has made waves for its performance, reportedly rivaling industry leader ChatGPT. However, concerns over data privacy and potential links to Chinese data collection practices have created turmoil in US markets. Erik Voorhees addressed these concerns directly, assuring users that when the R-1 model is accessed through Venice, “none of it is going anywhere,” reaffirming the platform’s commitment to data privacy and security.

The distribution of the VVV token has been carefully structured to incentivize both users and developers. Of the 100 million total supply:

• 25 million tokens are allocated to 100,000 eligible Venice users.

• 25 million tokens are reserved for specific Base users, including holders of Aerodrome Finance (AERO) and Virtuals Protocol (VIRTUAL) tokens.

• 35% of tokens are allocated to Venice itself for platform development and operations.

• 10% are set aside for an incentive fund aimed at fostering ecosystem growth.

• 5% are allocated for liquidity to ensure smooth trading operations.

• An additional 14 million tokens will be emitted annually to maintain token availability and support the platform’s growth.

Notably, Venice has chosen not to conduct a presale for outside investors and has refrained from implementing a governance mechanism, emphasizing its focus on utility over speculation.

Since its launch in May 2024, Venice AI has amassed a user base of over 400,000 registered accounts, with an impressive 15,000 inference requests per hour. The platform’s focus on privacy and uncensored AI interactions has resonated with a global audience, particularly amid growing concerns over data misuse and censorship in mainstream AI applications.

In addition to staking benefits, Venice has opened its API to AI agents, developers, and third-party applications, broadening its appeal and utility. The move aligns with Voorhees’ vision of empowering users and developers in a decentralized ecosystem.

Erik Voorhees: From Bitcoin Pioneer to AI Innovator

Erik Voorhees, a long-standing advocate for financial and data privacy, is no stranger to innovation. Before founding Venice AI, he made his mark as an early Bitcoin pioneer and the founder of the crypto exchange ShapeShift in 2014. 

Venice AI’s launch also coincides with the rise of DeepSeek R-1, a model that has disrupted traditional assumptions about AI by delivering high performance with lower computational requirements. Despite its controversial reception in the US, DeepSeek R-1’s capabilities have sparked a global conversation about the future of AI innovation and competition.

The launch of Venice Token and its rapid valuation growth represent a pivotal moment in the convergence of artificial intelligence and blockchain technology. By combining the privacy-first ethos of cryptocurrency with the transformative potential of generative AI, Venice AI is carving out a unique niche in an increasingly competitive landscape.

As the platform continues to grow, its emphasis on data privacy, decentralization, and user empowerment is likely to attract more developers, investors, and users seeking alternatives to traditional AI platforms. Whether Venice can sustain its early momentum remains to be seen, but its successful token launch signals strong market confidence in its vision.

With over 400,000 users already on board and a $1.65 billion FDV within hours of its token launch, Venice AI is poised to be a major player at the intersection of AI and blockchain. For privacy-conscious users and advocates of decentralized technology, Venice represents a beacon of what the future could hold.