Phemex CEO Federico Variola says AI has been a “net negative” for crypto, despite his own exchange’s recent push into the technology. Speaking on Cointelegraph’s Chain Reaction, Variola argued that AI has pulled investment away from crypto while empowering attackers and driving up cybersecurity costs for smaller teams — pressures that could push the industry toward greater centralization.
“It’s difficult to be bullish about AI in crypto,” he said. “Liquidity have been significantly diverted to to that industry on one side. On the other hand, AI has empowered a lot of bad actors that have been exploiting protocols.”
Variola’s assessment comes after Phemex announced an AI-focused transformation in February. He outlined plans to embed the technology across product development and internal operations at that point, though his latest comments focus on the broader crypto industry.
The Diversion Problem
Variola’s central complaint is simple: AI has become so attractive that capital is flowing away from crypto. He points to the liquidity shift as a direct hit to the sector.
He also warns that AI is making it easier for attackers to find weaknesses in crypto systems. “AI has empowered a lot of bad actors that have been exploiting protocols, whether with social engineering or… finding vulnerabilities,” he said, adding that small teams working on protocols will no longer operate without a massive cybersecurity budget.
The Centralization Risk
Variola sees a direct link between AI and consolidation. Smaller projects simply cannot afford the kind of security apparatus that larger ones can build.
“It’s difficult to envision a world in which AI is going to favor crypto specifically as an industry, since a lot of the fixes that we see actually encourage more centralization rather than less centralization,” he said.
The $116 Million Exploit
Recent crypto attacks point to AI as a weapon, not just a tool. In July, attackers drained roughly $116 million in Bitcoin from more than 5,200 addresses affected by a Coldcard hardware wallet flaw. That flaw is widely believed to have been discovered through the malicious use of AI.
Coinkite CEO Rodolfo Novak warned developers at the time that the “sober reality” is that AI-assisted code review can now uncover bugs that outpace the industry’s most seasoned experts.
The DeFi Dilemma
Variola’s warning extends to self-custody and decentralized finance. As AI becomes more common, he argues, users will have more reasons to worry.
“As AI becomes more pervasive, and whether it is your devices being hacked or social engineering, or all these kinds of strategies that are empowering threat actors, that makes DeFi a lot less appealing for a retail user because you have to worry about so many things that you didn’t have as much before.”
The Defensive Case
Not everyone agrees that AI is purely destructive. Security experts have pointed to AI’s defensive potential.
CertiK senior blockchain investigator Natalie Newson told Cointelegraph in April that “AI can also be one of the biggest defenses,” even as she warned that the technology was making attacks more sophisticated.
A Narrow Bright Spot
Despite his skepticism, Variola sees practical value in AI agents for investors. He envisions them helping users build portfolios or make better trading decisions.
“At the end of the day, still it will be up to the user to make the final decision. So I don’t think that agents will ever replace that action of taking the trade.”
The Verdict on Variola’s View
Variola’s position is specific. He is skeptical of AI’s current trajectory, but he sees real benefits ahead.
Key Facts Box
– $116 million in Bitcoin drained from more than 5,200 addresses in July
– Coldcard hardware wallet flaw widely believed to involve AI
– Phemex announced AI transformation in February
– Coinkite CEO Rodolfo Novak spoke in July
– CertiK’s Natalie Newson spoke in April
The question of whether AI ultimately helps or hurts crypto is far from settled. For now, the people building crypto are doing something unusual: speaking plainly about the risks.
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