AI has been a ‘net negative’ for crypto: Phemex CEO

Phemex CEO Federico Variola told Cointelegraph’s Chain Reaction that artificial intelligence has been a net negative for the cryptocurrency sector. He argued that AI is pulling investment away from crypto, enabling malicious actors, and raising security expenses for smaller projects, which could drive the industry toward greater centralization.

Capital diversion and attacker empowerment

Variola said liquidity is being significantly redirected to AI‑related ventures, while AI tools are helping bad actors exploit blockchain protocols through social engineering and vulnerability discovery.

Rising security costs and centralization risk

He warned that small development teams may no longer be able to operate without large cybersecurity budgets, making self‑custody and decentralized finance less attractive to retail users. The increased cost pressure could push the ecosystem toward more centralized solutions.

Recent AI‑linked exploits

In July, attackers used AI‑assisted techniques to drain roughly $116 million in Bitcoin from over 5,200 addresses affected by a Coldcard hardware‑wallet flaw. Industry experts have noted that AI‑driven code review can uncover bugs faster than seasoned developers.

Defensive potential of AI

Security researchers, such as CertiK’s senior blockchain investigator, acknowledge that AI can also serve as a strong defensive tool, even as it makes attacks more sophisticated.

Practical AI uses in trading

Variola sees value in AI agents for portfolio building and trading assistance but does not expect them to replace human decision‑making entirely.