Cursor AI Coding Tool Exposes Coinbase, Crypto Security to Malware

Recent developments in AI-driven cyber threats have heightened risks in the cryptocurrency sector, with Ripple warning XRP holders about increasing deepfake scams that use AI-generated audio and visuals to bypass security measures. Simultaneously, a critical vulnerability known as the "CopyPasta License Attack" has been discovered in Cursor, an AI coding assistant heavily used by Coinbase, allowing malicious code to be stealthily embedded and propagated across entire codebases via hidden instructions in common developer files like LICENSE.txt and README.md. This flaw enables attackers to plant backdoors, exfiltrate sensitive data, or disrupt systems without detection, raising serious concerns given Coinbase's substantial reliance on AI, with 40% of its code now AI-generated and plans to increase to 50%. Experts have criticized Coinbase's aggressive AI adoption strategy as reckless, emphasizing that such widespread use of vulnerable AI tools poses a significant security threat not only to Coinbase but to the broader crypto industry, as similar vulnerabilities exist in other AI coding tools like Windsurf, Kiro, and Aider. The convergence of sophisticated AI-enabled fraud tactics and exploitable AI coding tools highlights an urgent need for enhanced cybersecurity measures tailored to the unique challenges posed by AI in the crypto space. This evolving threat landscape underscores the importance of balancing innovation with rigorous security protocols to protect digital assets from increasingly complex attacks.