Cryptocurrency security is facing an unprecedented shift, one that goes beyond larger hacks or more sophisticated malware. According to Simone Maini, CEO of blockchain analytics firm Elliptic, the biggest emerging risk is not a single catastrophic breach but the sheer volume of AI-driven financial activity occurring at a speed and scale that human-operated systems cannot match. Speaking at a recent industry conference, Maini outlined a future where automated agents, both malicious and legitimate, transact faster than any compliance team can monitor, creating an arms race that the crypto industry must win to maintain trust and stability.
“We are moving from human-paced markets to machine-paced markets,” Maini said. “AI makes it cheaper and easier for bad actors to run large-scale hacks, scams and fraud. Our monitoring systems, built for a world where transactions happen slowly enough for humans to review, are no longer sufficient.” The warning comes as Elliptic, a pioneer in blockchain intelligence, announced a $120 million funding round led by Nasdaq and Deutsche Bank, with participation from other institutional investors. The funds will be used to develop what Maini calls an “agentic compliance system” — a suite of AI-powered tools designed to analyze blockchain data in real time and flag suspicious activity before it causes damage.
The concept of AI agents in crypto is not new, but their proliferation has accelerated dramatically. On the malicious side, generative AI enables attackers to craft highly convincing phishing campaigns, deepfake social engineering schemes, and smart contract exploits that adapt to defenses in milliseconds. Automated trading bots, often used for legitimate purposes, can also be hijacked to execute wash trades or market manipulation at speeds that overwhelm traditional surveillance. Meanwhile, decentralized finance (DeFi) protocols, which rely on automated smart contracts, are particularly vulnerable to flash loan attacks and oracle manipulation, both of which can be orchestrated by AI agents that iterate faster than any human auditor.
How AI is Changing the Threat Landscape
Historically, crypto security has focused on protecting private keys, securing wallets, and auditing smart contracts. While these measures remain important, the advent of generative AI has introduced a new dimension: the ability to generate and test thousands of attack vectors simultaneously. For example, an AI model can analyze the code of a DeFi protocol, identify potential vulnerabilities, and craft an exploit without human intervention. In 2025, researchers demonstrated an AI that could autonomously execute a flash loan attack, returning profits within minutes. The pace of such attacks is limited only by the speed of the blockchain, not by human reaction time.
Elliptic’s response is to fight fire with fire by deploying its own AI agents that monitor blockchain transactions, wallet behaviors, and chain analytics in real time. The company’s platform uses machine learning to build profiles of normal activity and flag deviations that indicate fraud, money laundering, or sanctions evasion. With the new funding, Elliptic plans to integrate large language models (LLMs) and reinforcement learning to make its agents adaptive — capable of anticipating novel attack patterns rather than just matching known signatures. This approach is essential because the very nature of AI-driven attacks is that they evolve as quickly as the defenses against them.
The arms race is not limited to Elliptic. Major competitors like Chainalysis and CipherTrace are also investing heavily in AI capabilities. The broader industry is watching closely because the stakes are enormous. Financial institutions, regulators, and even governments are increasingly relying on blockchain analytics to enforce Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. If compliance systems fail to keep pace with AI-enabled crimes, the result could be a loss of confidence in digital assets, regulatory crackdowns, and a retreat to traditional finance.
The Institutional Push and the $120 Million Signal
Elliptic’s fundraising round is a clear signal that institutional investors view AI-powered compliance as a critical infrastructure. “Nasdaq and Deutsche Bank are not just passive investors; they are partners helping us understand what the market needs,” Maini explained. “Their involvement shows that the traditional financial system recognizes the urgency of adapting to a crypto world where transactions are automated and global.” The $120 million is expected to fund research into agentic AI, expand Elliptic’s data coverage to include new blockchains and protocols, and hire talent in machine learning and cybersecurity.
This funding also reflects a broader trend: while the crypto market has seen volatility in prices, investment in security and compliance has remained robust. In 2025, the sector raised nearly $2 billion for security-related startups, according to data from Galaxy Research. The reason is simple: as more institutions enter the space through custody services, exchange-traded products, and tokenization, the demand for trustworthy surveillance tools grows. Without them, the risk of regulatory penalties and reputational damage becomes unacceptable.
However, some critics argue that the AI arms race could lead to an overly automated system that lacks human judgment and accountability. If an AI agent decides to freeze a wallet or flag a transaction, who is responsible if the decision is wrong? Regulators are beginning to grapple with these questions, and Maini acknowledges that transparency and explainability must be built into the systems. “We are not replacing humans; we are augmenting them,” she said. “Our agents are designed to bring suspicious activities to the attention of human analysts, but they cannot replace the nuanced understanding that a trained investigator brings.”
AI and the Quantum Threat
Compounding these challenges is the potential for AI to accelerate the timeline of quantum computing, which poses a separate existential threat to cryptography. A parallel article in the same publication noted that researchers believe AI may be speeding up the development of quantum computers capable of breaking the encryption that underpins blockchains. Security experts warn that the combination of AI and quantum computing could create a new class of cyber threats that today’s defenses cannot handle. While quantum computers remain a few years away, the race to develop quantum-resistant algorithms is intensifying.
Elliptic’s Maini sees a connection between these two trends: “Both AI and quantum computing are exponential technologies. They compound each other. The same way AI helps attackers find vulnerabilities faster, it can help researchers develop quantum-safe cryptography faster. But we cannot afford to wait. We need to invest in adaptive systems now.”
What This Means for the Crypto Ecosystem
The implications for crypto users and businesses are profound. For exchanges, custodians, and DeFi platforms, integrating AI-driven compliance is no longer optional — it is a competitive necessity. Those that fail to do so risk being targets of automated attacks that drain liquidity, damage reputation, or invite regulatory action. For regulators, the challenge is to create frameworks that allow innovation while ensuring consumer protection. Several jurisdictions, including the European Union with its Markets in Crypto-Assets (MiCA) regulation, are already requiring that crypto service providers implement real-time monitoring.
For everyday investors, the arms race means increased security in the long run, but also a more fragmented landscape. Smaller platforms that cannot afford advanced AI compliance may either consolidate or become riskier. The industry may see a “flight to quality” where only the most secure and compliant platforms survive. This is already happening: major exchanges like Coinbase and Kraken have invested heavily in surveillance systems, while smaller players have been acquired or shut down.
Maini concluded her remarks with a call to action: “We cannot fight tomorrow’s battles with yesterday’s tools. The AI arms race is here, and it is our responsibility to ensure that crypto remains a safe and trustworthy financial system. Elliptic is committed to building the infrastructure that makes that possible.”
As the lines between human and machine activity blur, the outcome of this arms race will shape not just crypto security but the future of finance itself. With $120 million in fresh capital and a clear vision, Elliptic intends to be at the forefront, but the ultimate winner may be the system that best balances automation with accountability.
Source: Coindesk News