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2 July 2025

AI turns cyberspace into a battleground in Israel-Iran conflict


In recent weeks, from Operation Spiderweb in the Russo-Ukrainian war to the Israel-Iran confrontation, we have seen the face of modern warfare evolve beyond traditional battlegrounds.

Conflicts are now fought as much through cyber operations that can paralyse infrastructure and manipulate information with unprecedented speed and precision.

The recent conflict between Israel and Iran laid bare this transformation. After Israel’s unprovoked strikes on 13 June and Iran’s retaliatory attacks, it became clear how artificial intelligence is transforming the very nature of digital warfare.

During the twelve-day confrontation, a parallel cyber war unfolded, with both nations deploying different AI-driven tools in their attacks.

Last week when Predatory Sparrow, a hacking group linked to Israel, breached Iran’s Bank Sepah it paralysed a key artery of the country’s financial system.

Just a day later, the group drained roughly $90 million from Nobitex, Iran’s largest cryptocurrency exchange, and deliberately sent the funds to inaccessible blockchain addresses.

According to consultancy Elliptic, this act effectively “burned” the assets, ensuring they could not be recovered.

These coordinated strikes on Iran’s banking and cryptocurrency sectors, alongside Iran’s own AI-powered phishing and espionage campaigns, made clear that the conflict had become a proving ground for AI-driven unconventional warfare.

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