Helius CEO Says Crypto's ‘Straw Houses' Face Collapse As AI Raises The Stakes

The "straw houses" problem is not limited to small projects. Mumtaz pointed to high-profile hacks on protocols that had been audited multiple times. The audits gave users false confidence, he said, because they checked for known flaws rather than proving the absence of flaws. Formal verification does not eliminate all risk – it requires a precise specification of what the code should do – but it raises the bar for what counts as secure.

Crypto investors have a limited set of signals to judge security. A list of audit firms on a project's site says little about the depth of the review. Mumtaz's framing suggests a better question: is the team using formal verification tools, and if not, why not? Teams that treat security as a checkbox will look increasingly exposed as AI-driven analysis becomes standard.

The warning comes at a time when institutional capital is flowing back into crypto after the 2022-2023 bear market. Mumtaz noted that larger allocators already demand higher software standards. As more of them enter, the gap between infrastructure-grade protocols and speculation-grade contracts will widen.

None of this means the industry collapses. It means the projects that survive will be the ones built with the same rigor expected in traditional finance. The rest will be the straw houses that fall.

Mumtaz did not name specific tokens or teams in his posts. His point was structural: the technology that made crypto accessible also made it fragile. AI is now making that fragility visible.