AI coding tools like Cursor are creating dangerous security vulnerabilities that hackers exploit to steal crypto from developers. Learn how malicious project folders and weaponized extensions drain wallets in seconds and how to protect your assets.
Key Insights
- Bad actors can now use project folders to compromise entire systems simply by developers using AI-native editors like Cursor.
- Hackers are weaponizing configuration files and AI extensions to bypass security and drain crypto.
- The “Vibe Coding” culture often leads developers to trust unverified code. This makes them easy targets for advanced social engineering.
The software space is moving at a breakneck pace thanks to the rise of new AI coding tools. Developers now use “Vibe Coding” to turn simple descriptions into entire software repositories in seconds.
While this speed is great for building apps, it has opened a dangerous backdoor for cybercriminals, and security firms like SlowMist are warning about possible asset loss.
How AI Coding Tools Create New Security Risks?
Modern editors like VS Code and the AI-native Cursor use workspace settings to make life easier. These settings automate boring tasks like setting up your environment or installing tools so that developers can get started with coding in mere seconds.
However, this automation is exactly what hackers are now using. They now hide instructions inside a project folder and force victim computers to run malicious scripts the moment they click “Open Folder.”
🚨SlowMist TI Alert🚨
If you’re doing Vibe Coding or using mainstream IDEs, be cautious when opening any project or workspace. For example, simply using “Open Folder” on a project may trigger system command execution — on both Windows and macOS.
⚠️ Cursor users: especially at… pic.twitter.com/9pNgqKoZKm
— SlowMist (@SlowMist_Team) January 8, 2026
This is not just a theoretical problem. In early 2026, researchers found a vulnerability in the Model Context Protocol (MCP) used by Cursor.
This protocol allows AI agents to interact with your local tools. If an attacker gets you to approve a “safe” configuration once, they can later change it to something harmful without any new warnings.
This “trust bypass” allows for silent, long-term access to an entire ecosystem.
The Danger of Malicious Extensions
Beyond folder settings, the extension marketplaces for AI coding tools are becoming a main target. Developers often lose hundreds of thousands of dollars (even millions) because hackers use clever tricks to manipulate downloadable packages.
Once a victim developer installs a tampered package, the software acts as a “dropper” for malware, searching the computer for private keys and seed phrases.
Before the victim realizes that whatever they downloaded was broken, the funds are already gone. This shows that even if you think you are safe, a single untrusted plugin can destroy years of work.
Read more: Why DeepSeek AI Favors XRP and Solana Over Dogecoin Heading Into 2026?
Why Crypto Developers Are the Main Target?
Hackers love targeting blockchain developers because their machines are like digital vaults. Unlike a regular office worker, a crypto developer often has direct access to very expensive assets.
On developer computers, their local files frequently contain secret keys, API tokens for infrastructure like Infura and browser data for wallets like MetaMask.
When AI coding tools enter the mix, a single mistake has instant financial consequences. Traditional malware might sit on a computer for months to steal data, but crypto drainers work in seconds.
They are designed to find specific strings like “mnemonic” or “private_key” and send them to a remote server. Once that data leaves the victim machine, the transaction to empty their wallet is usually the next step.
The Trap of Job Opportunities
Another threat involves “collaboration” requests on sites like GitHub. A hacker might reach out with a high-paying job offer or a cool open-source project.
They might send a link to a repository and ask the developer to “take a quick look” at the code. The moment that repository is opened with an AI-powered editor (or really any kind of editor at all), the trap springs.
SlowMist says that this method is becoming the preferred way to drain developer, trader and “whale” wallets.
Protecting Your Assets While Using AI
The benefits of using an AI-native editor are too big to ignore. However, despite these benefits, you must adopt a “Zero Trust” mindset.
You can no longer assume that a project is safe just because it looks normal on GitHub. You must treat every new folder as a potential threat until you prove otherwise.
The most effective way to stay safe is to use a separate machine for finances and to never keep primary wallets on the same computer where you experiment with new AI coding tools.
If you must use one machine, run your editor inside a Docker container or a virtual machine.
Disclaimer: This article is intended solely for informational purposes and should not be construed as financial advice. Investing in cryptocurrencies involves substantial risk, including the possible loss of your capital. Readers are encouraged to perform their own research and seek guidance from a licensed financial advisor before making any investment decisions. Voice of Crypto does not endorse or promote any specific cryptocurrency, investment product, or trading strategy mentioned in this article.
