Key Insights:
- Paradigm’s investments highlight that the firm is investing in both the opportunities and risks of AI crypto
- AI crypto is making it faster and cheaper to attack older smart contracts, while also drawing more venture capital to the sector.
Two announcements came in at the same time on July 8 and 9, highlighting two different perspectives on AI Crypto.
Paradigm is one of the largest crypto venture firms. It announced a new $1.2 billion fund to invest in sectors beyond digital assets, such as artificial intelligence, robotics, and other frontier technologies.
Besides, blockchain security researchers have warned that AI tools are making it easier and cheaper to attack smart contracts. Hackers can now scan thousands of contracts within minutes and search for inactive code loopholes.
Both stories revolve around AI crypto, but their trends are totally different.
AI Crypto’s Biggest Investment Signal in Years
Paradigm announced a $1.2 billion fund on Wednesday. The firm previously raised $2.5 billion in 2021 and $850 million in 2024, focusing solely on digital asset investments.
But this latest $1.2 billion fund will invest in AI, robotics, and crypto, which Paradigm calls “frontier technology startups.”
Paradigm has already invested in non-crypto businesses like Zipline, a drone delivery company valued at $7.6 billion in January 2026, and True Anomaly, a space defense startup valued at $2.2 billion in April. Besides, within the crypto space, this firm has invested in Hyperliquid, Kalshi, Tempo, and a stablecoin-focused blockchain co-founded with Stripe.
Paradigm co-founder Matt Huang already explained the relationship between AI and crypto in 2023 via an X post. He stated that the two sectors are not competing and that there will be “plenty of overlap” between the technologies.
AI Crypto’s Most Urgent Security Problem
While Paradigm highlighted optimism about AI, security researchers warned about the short-term risks AI could pose.
According to CertiK data, hackers stole $1.32 billion from crypto protocols and smart contracts in the first half of 2026 alone. The firm also highlighted that attackers are using advanced automated tools that help them find security flaws in many protocols or security contracts simultaneously.
SlowMist’s first-half 2026 report stated that while the total amount of losses from hacks decreased by around 60%, the number of attacks increased by 50%. It signals that attacks are becoming more frequent.
In December 2025, Anthropic researchers tested AI agents on 2,849 newly launched smart contracts with no known security issues or flaws. Still, the agents found two issues and created attack code at a computing cost of $3,476. It attracted contracts valued at $3,694. This study concluded that profitable attacks are technically possible through AI.
Where the Two Perspectives Connect
Paradigm and OpenAI have developed an open-source smart contract security tool, known as EVMbench. It links Paradigm’s investment approach and the security concerns due to AI raised by researchers.
That tool uses AI agents to identify and fix issues and flaws in Ethereum Virtual Machine contracts. This signals that Paradigm is not only investing in AI and crypto companies but also building tools that support the security of the crypto ecosystem.
AI is creating a new security threat for crypto, particularly involving inactive smart contracts that hold funds. Recent attacks on inactive protocols signal that one-time audits may no longer be enough to secure smart contracts. That’s because attackers have better automation tools and AI-powered defenses.
Paradigm’s $1.2 billion fund, EVMbench, and the broader AI-crypto infrastructure being built by Coinbase, Stripe, and other developments signal that crypto’s next trend requires AI-native tooling to build and to protect new crypto systems.
While AI is creating new security risks, it is also driving investment and innovation in crypto. The capital entering AI-crypto is genuine and institutional. Both trends are developing at the same time, regardless of short-term volatility in crypto prices.
