Real AI use cases in crypto, No. 3: Smart contract audits & cybersecurity
Every day this week we’re highlighting one genuine, no bullsh*t, hype free use case for AI in crypto. Today it’s the potential for using AI for smart contract auditing and cybersecurity, we’re so near and yet so far.
One of the big use cases for AI and crypto in the future is in auditing smart contracts and identifying cybersecurity holes. There’s only one problem — at the moment, GPT-4 sucks at it.
Coinbase tried out ChatGPT’s capabilities for automated token security reviews earlier this year, and in 25% of cases, it wrongly classified high-risk tokens as low-risk.
James Edwards, the lead maintainer for cybersecurity investigator Librehash, believes OpenAI isn’t keen on having the bot used for tasks like this.
“I strongly believe that OpenAI has quietly nerfed some of the bot’s capabilities when it comes to smart contracts for the sake of not having folks rely on their bot explicitly to draw up a deployable smart contract,” he says, explaining that OpenAI likely doesn’t want to be held responsible for any vulnerabilities or exploits.
This isn’t to say AI has zero capabilities when it comes to smart contracts. AI Eye spoke with Melbourne digital artist Rhett Mankind back in May. He knew nothing at all about creating smart contracts, but through trial and error and numerous rewrites, was able to get ChatGPT to create a memecoin called Turbo that went on to hit a $100 million market cap.
But as CertiK Chief Security Officer Kang Li points out, while you might get something working with ChatGPT’s help, it’s likely to be full of logical code bugs and potential exploits:
“You write something and ChatGPT helps you build it but because of all these design flaws it may fail miserably when attackers start coming.”
So it’s definitely not good enough for solo smart contract auditing, in which a tiny mistake can see a project drained of tens of millions — though Li says it can be “a helpful tool for people doing code analysis.”
Richard Ma from blockchain security firm Quantstamp explains that a major issue at present with its ability to audit smart contracts is that GPT -4’s training data is far too general.
Also read: Real AI use cases in crypto, No. 1 — The best money for AI is crypto
“Because ChatGPT is trained on a lot of servers and there’s very little data about smart contracts, it’s better at hacking servers than smart contracts,” he explains.
So the race is on to train up models with years of data of smart contract exploits and hacks so it can learn to spot them.
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“There are newer models where you can put in your own data, and that’s partly what we’ve been doing,” he says.
“We have a really big internal database of all the different types of exploits. I started a company more than six years ago, and we’ve been tracking all the different types of hacks. And so this data is a valuable thing to be able to train AI.”
Race is on to create AI smart contract auditor
Edwards is working on a similar project and has almost finished building an open-source WizardCoder AI model that incorporates the Mando Project repository of smart contract vulnerabilities. It also uses Microsoft’s CodeBert pretrained programming languages model to help spot problems.
According to Edwards, in testing so far, the AI has been able to “audit contracts with an unprecedented amount of accuracy that far surpasses what one could expect and would receive from GPT-4.”
The bulk of the work has been in creating a custom data set of smart contract exploits that identify the vulnerability down to the lines of code responsible. The next big trick is training the model to spot patterns and similarities.
“Ideally you want the model to be able to piece together connections between functions, variables, context etc, that maybe a human being might not draw when looking across the same data.”
While he concedes it’s not as good as a human auditor just yet, it can already do a strong first pass to speed up the auditor’s work and make it more comprehensive.
“Sort of help in the way LexisNexis helps a lawyer. Except even more effective,” he says.
Don’t believe the hype
Near co-founder Illia Polushkin explains that smart contract exploits are often bizarrely niche edge cases, that one in a billion chance that results in a smart contract behaving in unexpected ways.
But LLMs, which are based on predicting the next word, approach the problem from the opposite direction, Polushkin says.
“The current models are trying to find the most statistically possible outcome, right? And when you think of smart contracts or like protocol engineering, you need to think about all the edge cases,” he explains.
Polushkin says that his competitive programming background means that when Near was focused on AI, the team developed procedures to try to identify these rare occurrences.
“It was more formal search procedures around the output of the code. So I don’t think it’s completely impossible, and there are startups now that are really investing in working with code and the correctness of that,” he says.
But Polushkin doesn’t think AI will be as good as humans at auditing for “the next couple of years. It’s gonna take a little bit longer.”
Also read: Real AI use cases in crypto, No. 2 — AIs can run DAOs
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Despite the ongoing market meltdown on US trade tariffs, executives at major cryptocurrency firms Messari and Sygnum are bullish on institutional Bitcoin adoption later in 2025.
Speaking on a panel at Paris Blockchain Week on April 8, Messari CEO Eric Turner and Sygnum Bank co-founder Thomas Eichenberger said they expect a significant shift in the banking sector’s involvement with crypto in the second half of the year.
According to the executives, the global banking push into Bitcoin (BTC) services has great potential to happen in the second half of 2025 as regulators embrace crypto, including stablecoins and crypto services by banks.
“I think we’re probably looking at a muted Q2, but I’m really excited for Q3 and Q4,” Messari’s Turner said during the panel discussion moderated by Cointelegraph CEO Yana Prikhodchenko, forecasting “really interesting” things coming to the crypto market in 2025.
Crypto adoption is not just about Trump
While some investors focus on the pro-crypto stance of US President Donald Trump, Turner emphasized that broader regulatory momentum is what matters most.
“When you look at the potential of having market structure regulation in the US, stablecoin regulation, and just the fact that across the board, not just President Trump himself, but the SEC and all these regulatory industries are really embracing crypto,” Turner said.
Paris Blockchain Week’s panel with Cointelegraph CEO Yana Prikhodchenko, Bancor co-founder Eyal Hertzog, Sygnum co-founder Thomas Eichenberger, Messari CEO Eric Turner, AWS fintech leader Alex Matsuo and Near chief operating officer Chris Donovan. Source: Cointelegraph
Sygnum co-founder Thomas Eichenberger said international banks with US branches are also poised to enter the market once the legal landscape becomes clearer:
“I think it’s a matter of fact that US banks are preparing to be able to offer crypto custody and at least crypto spot trading services anytime soon.”
“I think by then I would agree with you, Eric,” he continued, projecting a continued phase of market uncertainty until the US establishes a clear regulatory framework.
Related: Ripple acquires crypto-friendly prime broker Hidden Road for $1.25B
Banks are no longer afraid of Bitcoin regulators
With the establishment of clear crypto rules for banks in the US, there will be a rush for crypto services by large international banks that are incorporated outside of the US but have a US-based presence, Eichenberger said.
“Some of them may have had their strategic plans in their cupboard to offer crypto-related services, but have been afraid that at some point they will be gone after by any of the US regulatory authorities,” he said, adding:
“Now I think there’s no one to be afraid of anymore in terms of regulatory authorities worldwide. So I think many of the large international banks will launch this year.”
Magazine: Financial nihilism in crypto is over — It’s time to dream big again
Global trade tensions triggered by US President Donald Trump’s sweeping tariff measures may come to an end with a potential deal with China as investors remain concerned about escalation from both sides.
Trump’s April 2 announcement of reciprocal import tariffs sent shockwaves through global equity and crypto markets. The measures include a 10% baseline tariff on all imported goods, effective April 5, with higher levies — such as a 34% tariff on Chinese imports — set to begin on April 9.
However, the tariff negotiations may only be “posturing” for the US to reach an agreement with China, according to Raoul Pal, founder and CEO of Global Macro Investor.
“In the end, almost all the other tariff negotiations and rhetoric are all about getting China to agree a deal,” Pal wrote in an April 8 X post, adding:
“That is the big prize and both China and the US understand it and need it. Everything else is negotiation posturing. China needs a weaker $ and the US needs tariffs.”
Source: Raoul Pal
“Also, the US is trying to shut down China tariff arbitrage using other channels such as Mexico or Vietnam,” Pal said.
Related: Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur Hayes
China retaliates with new tariffs
Considering China’s latest retaliatory measures, a resolution remains unlikely in the short term.
In response to US tariffs, China imposed a 34% tariff on all US imports effective April 10, media outlet Xinhua News reported on April 4. China’s foreign ministry also vowed to “fight till the end” against Trump’s tariffs, which it called “bullying” by the world’s largest economy.
China overtakes the US in global trade. Source: Econovis
China overtook the US in 2012 to become the world’s largest trading nation by the total value of exports and imports, surpassing $4 trillion in goods trade that year, according to The Guardian.
Crypto markets watch trade outcome closely
As the trade dispute continues to evolve, analysts say a potential agreement between the two global superpowers could serve as a key catalyst for recovery in digital asset markets.
Crypto markets have a 70% chance to bottom by June 2025 before recovering, Nansen analysts predicted.
Related: Crypto market bottom likely by June despite tariff fears: Finance Redefined
Investor appetite for risk assets such as Bitcoin will depend on the global tariff responses from other countries, according to Nicolai Sondergaard, a research analyst at Nansen.
“We have reached somewhat of a local bottom in regard to tariffs and the impact on prices,” the analyst said during Cointelegraph’s Chainreaction live show on X, adding:
“Trump came out guns blazing, and we’ve mostly seen the worst from the US side, so we’ll see if other countries are willing to drop some of the tariffs because it’s very likely the US will do the same.”
Magazine: Bitcoin ATH sooner than expected? XRP may drop 40%, and more: Hodler’s Digest, March 23 – 29
A Nigerian court has reportedly delayed the country’s tax evasion case against Binance until April 30 to give time for Nigeria’s tax authority to respond to a request from the crypto exchange.
Reuters reported on April 7 that a lawyer for Binance, Chukwuka Ikwuazom, asked a court the same day to invalidate an order allowing for court documents to be served to the company via email.
Binance doesn’t have an office in Nigeria and Ikwuazom claimed the Federal Inland Revenue Service (FIRS) didn’t get court permission to serve court documents to Binance outside the country.
“On the whole the order for the substituted service as granted by the court on February 11, 2025 on Binance who is … registered under the laws of Cayman Islands and resident in Cayman Islands is improper and should be set aside,” he said.
FIRS sued Binance in February, claiming the exchange owed $2 billion in back taxes and should be made to pay $79.5 billion for damages to the local economy as its its operations allegedly destabilized the country’s currency, the naira, which Binance denies.
It also reportedly alleged that Binance is liable to pay corporate income tax in Nigeria, as it has a “significant economic presence” there, with FIRS requesting a court order for the exchange to pay income taxes for 2022 and 2023, plus a 10% annual penalty on unpaid amounts along with a nearly a 27% interest rate on the unpaid taxes.
Nigeria’s legal history with Binance
In February 2024, Nigeria arrested and detained Binance executives Tigran Gambaryan and Nadeem Anjarwalla on tax fraud and money laundering charges. The country dropped the tax charges against both in June and the remaining charge against Gambaryan in October.
Tigran Gambaryan (right) was seen in a September video struggling to walk into a courtroom in the Nigerian capital of Abuja. Source: X
Anjarwalla managed to slip his guards and escape Nigerian custody to Kenya in March last year and is apparently still at large.
Related: Binance exec shares details about release from Nigerian detention
Gambaryan, a US citizen, returned home in October after reports suggested his health had deteriorated during his detainment with reported cases of pneumonia, malaria and a herniated spinal disc that may need surgery.
Binance stopped its naira currency deposits and withdrawals in March 2024, effectively leaving the Nigerian market.
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