Updated January 28th, 2024 at 10:44 IST
The prevalence of social media platforms and influencers amplifies the challenge, as fraudsters find it easier to disseminate false information.
Representative | Image:Unsplash
CFTC warns against AI: The search for substantial cryptocurrency gains has prompted a cautionary advisory from the United States Commodities and Futures Trading Commission (CFTC) against reliance on artificial intelligence (AI) trading bots. Despite their growing popularity, the CFTC underlines that AI cannot predict the future.
In a recent statement titled “Customer Advisory Cautions the Public to Beware of Artificial Intelligence Scams,” the CFTC warns crypto investors seeking extraordinary returns to be cautious of exaggerated promises from AI. Specifically, they highlight the risks associated with bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technologies.
The prevalence of social media platforms and influencers amplifies the challenge, as fraudsters find it easier to disseminate false information. Melanie Devoe, director of CFTC’s office of customer education and outreach, underscores the need for investors to be wary of the hype, as AI has become an avenue for malicious actors targeting novice investors.
The advisory further advises investors to thoroughly research the background of companies or traders before entrusting their funds to trading bots or trade-signal providers.
Last year witnessed a significant focus on AI-driven crypto trading bots. In April 2023, U.S. state watchdogs took action against an AI trading bot claiming extraordinary returns, alleging it operated a Ponzi scheme. The lack of evidence supporting the bot’s capabilities raised suspicions.
Blockchain analysis firm Arkham Intelligence highlighted a case in June 2023 where a crypto trading bot leveraged a $200 million flash loan but only secured a minimal $3.24 in profit.
Despite these concerns, some major crypto exchanges, including Bitget, have explored integrating AI bots on their platforms. Bitget’s CEO Gracy Chen explained that their Commodities Trading Advisor (CTA) AI bot operates by continuously analysing historical strategy data, enabling self-learning and intuitive strategy creation for users.
This news is republished from another source. You can check the original article here