Coinbase's Preferred AI Coding Tool Can Be Hijacked by New Virus

Cybersecurity firm HiddenLayer has warned of a new virus that can inject malicious prompts into Cursor, an AI coding tool favored by crypto exchange Coinbase. The artificial intelligence coding tool is widely used by developers worldwide, including those working on high-profile projects like Coinbase.

The vulnerability allows hackers to silently inject malware and "spread itself across an organization," according to HiddenLayer. This means that even if a developer doesn't intentionally introduce the virus, it can still be spread through their code, potentially causing widespread damage.

How Does the Virus Work?

The CopyPasta License Attack works by hiding malicious instructions in common developer files, such as LICENSE.txt and README.md. These files are used by AI coding tools to direct their behavior without a user knowing. The virus is hidden in markdown text within these files, which is only visible when the file is rendered into its final format.

"By convincing the underlying model that our payload is actually an important license file that must be included as part of every file that is edited by the agent, we can quickly distribute the prompt injection across entire codebases with minimal effort," said HiddenLayer. "This mechanism could be adapted to achieve far more nefarious results."

What Does This Mean for Coinbase and Other Companies?

The vulnerability has significant implications for companies that rely on AI coding tools, including Coinbase. The fact that a company like Coinbase, which claims to prioritize security, is using an AI tool with such a major vulnerability raises serious questions about its commitment to protecting user data.

Coinbase's Response

Coinbase CEO Brian Armstrong has come under fire for his aggressive push to use AI in coding, with some critics calling it "insane" and a "giant red flag" for any security-sensitive business. Armstrong argues that AI-generated code needs to be reviewed and understood, but some experts argue that this approach is too rigid and may not work for all areas of the exchange.

Other Companies Affected

In addition to Coinbase, other companies that use AI coding tools such as Windsurf, Kiro, and Aider are also vulnerable to the CopyPasta License Attack. This highlights the need for developers and companies to be aware of these types of vulnerabilities and take steps to protect themselves.

A Call to Action

As a major crypto custodian, Coinbase should prioritize security above all else. The use of AI coding tools is not a magic bullet that solves all problems, and companies must be cautious about relying on them for critical systems.

"Software company leaders: don't do this," said decentralized exchange Dango founder Larry Lyu. "AI is a tool, but mandating its use at a certain level is insane."