AI Cyber Threats Shake Crypto Industry

The April hacks of crypto companies Drift and Kelp DAO have shaken the crypto sector because those attacks may have been aided by artificial intelligence (AI), Bloomberg reported Friday (May 15).

Following the hacks, which netted the attackers a total of almost $600 million, Drift shut down and plans to relaunch after receiving stablecoins from Tether; a decentralized finance (DeFi) project called Carrot that had exposure to Drift shut down permanently; and lending protocol Aave, which was used to launder proceeds from one of the hacks, needed a rescue after investors pulled $9 billion, according to the report.

What has alarmed the industry most about these hacks is that they were likely supported by AI, the report said. While that cannot be proven, cybersecurity experts said in the report that the attacks had become so much more sophisticated, so quickly, that the hackers behind them were probably helped by AI.

Beyond that, there is the looming presence of Anthropic’s Mythos AI model, which the company has kept in limited release due to the cybersecurity risks it poses, as well as the likelihood that hackers will obtain other powerful AI models.

Cybersecurity experts said in the report that AI can help hackers find weaknesses in a blockchain protocol in days or hours, rather than months, and can give anyone the skills of an elite hacker.

Crypto firms’ responses to the threat of AI include adding software that scans devices connected to a network to detect potential threats; installing circuit breakers that pause or limit transactions above a certain threshold; and, for DeFi lenders, expanding the risk framework for collateral to include cybersecurity factors, per the report.

In an update Drift provided in April while the attack on its crypto exchange was underway, the company said: “This was a highly sophisticated operation that appears to have involved multi-week preparation and staged execution, including the use of double nonce accounts to pre-sign transactions that delayed execution.”

In the Kelp DAO hack, it was reported in April that this action highlighted the risks of interconnected systems in DeFi because the failure of one piece can threaten the entire structure.