India’s cybersecurity agency has warned cryptocurrency exchanges and financial institutions of an escalating AI-assisted hacking campaign that exploits weaknesses in cloud infrastructure, payment APIs, and software environments to steal wallet keys and siphon funds.

The Indian Computer Emergency Response Team (CERT-In) identified the threat actor as CRAFTY FALCON, naming 4 AI-assisted offensive-security tools used in the attacks:

  • ARTEX,

  • PentAGI,

  • Cairn, and

  • CyberStrikeAI.

The tools

  • automate reconnaissance,

  • generate customised attack scripts, and

  • adapt techniques based on how targeted systems respond,

allowing hackers to execute attacks at machine speed.

 

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CERT-In identified several vulnerabilities being exploited, including

  • exposed testing environments connected to production systems,

  • stolen credentials,

  • misconfigured cloud services, and

  • payment APIs that accept unauthorised requests.

Attackers also use small test transactions, sometimes worth just one rupee, to establish whether fraudulent transfers will succeed before attempting larger withdrawals. Some attacks are timed for weekends and holidays when security monitoring may be reduced.

For institutions recovering from an incident, the advisory recommends conducting forensic checks to confirm that the intrusion has been completely eradicated, followed by continued threat hunting.

 

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The campaign has reportedly targeted cryptocurrency exchanges and virtual digital asset service providers resulting in stolen wallet keys and funds being drained. CERT-In did not identify affected exchanges or disclose losses.

For crypto service providers, CERT-In recommends

  • storing wallet keys in hardware security modules or cold storage,

  • requiring multi-signature approvals for withdrawals, and

  • monitoring withdrawal patterns for unusual activity.

Keys should be rotated immediately if a compromise is suspected.

 

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The warning highlights a growing security challenge for crypto businesses where AI is lowering the technical barriers to discovering and exploiting infrastructure weaknesses, automating attacks, and scaling operations.

CERT-In recommends stronger cloud and API security, continuous monitoring, hardware-based key protection, cold storage, and multi-signature withdrawal approvals.

 

 

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