Regulators are shedding light on scammers who take advantage of the appeal of artificial intelligence (AI) to promote cryptocurrency trading systems with erroneous claims of high or guaranteed returns.
With the growing trend of using automated software for trading, the Commodity Futures Trading Commission (CFTC) issued a customer advisory. advisory highlighting that these AI systems cannot predict market movements definitively.
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The customer advisory titled "AI will not turn trading robots into money-making machines" exposes the fraudulent tactics used to attract investors and tells stories such as that of Cornelius Johannes Steynberg, who cheated more than $1.7 billion worth of Bitcoin (btc) from unsuspecting victims.
He CFTC He has subsequently advised traders to avoid the seductive high-profit guarantees of AI-assisted tools, warning that such exaggerated claims often do not come true.
Melanie Devoe of the CFTC's Customer Care and Education division says traders should approach these AI promises with skepticism, recognizing the potential for exploitation by unscrupulous individuals to lure the unwary.
Despite these concerns, some major exchange platforms, such as bitget, continue to innovate with AI robots. Last July, Bitget CEO Gracy Chen shared that its AI systems work by processing historical strategic data for continuous improvement.
Simultaneously, divisions of the CFTC and the Office of Technology Innovation thrown out a Request for Comments (RFC) to better understand the current and potential uses of AI (and its dangers) in derivatives markets.
By casting a wide net for feedback, the CFTC wants to unearth insights into the role of AI in various facets of traditional and cryptocurrency trading, from transaction risk management to improved market surveillance methods, as well as the implications on cybersecurity, analysis and customer service areas.
CFTC Chairman Rostin Behnam emphasized the importance of aligning supervisory oversight with technological advances, ensuring that customer protection remains paramount as markets evolve.
Behnam positioned the RFC as critical to the Commission's strategic focus on fostering a data-driven approach to its regulatory interventions and oversight.
The agency also highlighted the potential benefits of AI within regulatory compliance, especially for market surveillance, anti-money laundering (AML) strategies and reporting obligations.
Investors and market participants are encouraged to provide feedback by April 24, 2024, as the CFTC contemplates new regulations or guidance that may shape the future of AI in conventional and cryptocurrency trading.
