Phemex CEO Federico Variola: The AI Wave Has Drained Significant Cryptocurrency Funds and Enhanced Hacking Capabilities

In an exclusive interview with Cointelegraph Chain Reaction, Phemex's current CEO Federico Variola expressed a pragmatically pessimistic view on the application of artificial intelligence in the cryptocurrency asset space. He bluntly stated that, from a macro industry perspective, AI has had a "net negative" impact on the crypto ecosystem.

The core logic of this conclusion is based on three major negative shocks:

• Withdrawal of Funds and Liquidity: In recent quarters, venture capital, institutional funds, and top technical talents have flocked to the AI infrastructure sector, resulting in a significant resource drain from the crypto ecosystem.

• Enhanced Capabilities of Attackers: AI has not only made phishing and social engineering attacks more covert and precise but has also greatly improved the efficiency of discovering underlying vulnerabilities. With AI-assisted code review tools, hackers can now easily identify code flaws that seasoned human experts might overlook.

• Exponential Rise in Defense Costs: In the past, small startup teams only needed a few experienced developers to maintain relative security for their protocols; however, when facing AI-armed hacker groups, project teams must allocate huge security investments. This capital barrier, driven by heightened security thresholds, is effectively forcing the market towards centralization, contrary to the industry's original intention of decentralization.

Rising Barriers to Self-Custody

The above warnings are not merely theoretical. In July of this year, the well-known cold wallet project Coldcard experienced a severe security vulnerability, with attackers successfully infiltrating and emptying over 5,200 wallet addresses, stealing approximately $116 million worth of Bitcoin. Industry insiders widely speculate that this vulnerability was likely quickly identified by hackers using AI scanning and analysis tools.

Rodolfo Novak, CEO of Coldcard's development team Coinkite, subsequently issued a public warning, admitting that the penetration power of current AI-assisted code reviews has substantially surpassed the reaction speed of the industry's top experts.

For ordinary retail investors, this dimensional attack has directly raised the entry barriers for self-custody and participation in DeFi protocols. Empowered by AI, device intrusions and social engineering attacks have become pervasive, forcing users to expend significant effort to identify risks, which undoubtedly diminishes the appeal of decentralized finance to the mass market.

Potential for Assisted Trading

Despite holding reservations about macro trends, Variola did not completely deny the practical value of AI. He pointed out that AI agents have viable applications in assisted trading scenarios such as portfolio management, market signal analysis, and risk alerts for new users. However, he remains cautious about the radical view that "AI will completely replace human traders," believing that the decision-making power to trigger trades will ultimately remain in human hands.

Stepping outside the perspective of technological offense and defense, the zero-sum game between AI and the cryptocurrency industry in terms of capital, talent, regulatory resources, and public opinion has only just begun. This also partly explains why many current crypto projects are eager to label themselves with AI—essentially to secure survival capital in a context of extreme resource tilt.

It is worth noting that Phemex officially announced in February this year that it would initiate a comprehensive AI transformation, planning to deeply integrate AI technology into its products and operational systems. Whether Variola's current pessimistic tone stems from a clear understanding of the overall structural challenges in the industry or from encountering real business bottlenecks while advancing the AI strategy still requires market validation.

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