Phemex CEO: AI Has Been a 'Net Negative' for Crypto — Even for the Exchange That Just Pivoted Into It 🤖

Phemex CEO Federico Variola said artificial intelligence has been a "net negative" for the crypto industry, citing capital flight, empowered attackers and rising cybersecurity costs that he warned could push the sector toward greater centralization. His remarks on Cointelegraph's Chain Reaction podcast come months after his own exchange unveiled an AI-focused transformation in February, when he outlined plans to embed the technology across product development and internal operations. "It's difficult to be bullish about AI in crypto," Variola 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 argued that the defensive responses AI demands could reshape the industry's structure. "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. He also warned that the technology could erode one of crypto's core value propositions. "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," Variola said.

The CEO's assessment lands as AI has been linked to recent large-scale exploits. In July, attackers drained roughly $116 million in Bitcoin from more than 5,200 addresses affected by a Coldcard hardware wallet flaw widely believed to have been discovered through the malicious use of AI. Coinkite CEO Rodolfo Novak warned 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. "AI has empowered a lot of bad actors that have been exploiting protocols, whether with social engineering or… finding vulnerabilities," Variola said, adding that small protocol teams will no longer be able to operate without a massive cybersecurity budget.

Not all assessments have been uniformly skeptical. CertiK senior blockchain investigator Natalie Newson told Cointelegraph in April that "AI can also be one of the biggest defenses," even as she warned the technology was making attacks more sophisticated. Variola also acknowledged practical benefits, saying he sees a role for AI agents in helping investors build portfolios and make better trading decisions, though he did not expect the technology to fully replace human judgment, leaving the final call to the user.