In a recent consumer alert, the Commodity Futures Trading Commission (CFTC) warned about the proliferation of scams leveraging artificial intelligence (AI) to lure unsuspecting individuals into fraudulent crypto investment schemes.
Specifically, these scams exploit the growing interest in cryptocurrency arbitrage trading by making “audacious claims” of generating outsized profits through AI-powered algorithms.
AI-Driven Crypto Investment Scams Exposed
According to the CFTC’s press release, these actors peddle the notion that AI-created algorithms can deliver “astronomical returns”, often ranging in the tens of thousands of percent, or boast a 100 percent success rate. These claims encompass various algorithms, including automated trading bots and signal providers.
According to the CFTC, the regulator has taken legal action against several defendants over the years who defrauded customers by marketing commodity pools, crypto assets, or investment programs that falsely promised consistent, above-average returns through the utilization of AI.
Instead of the promised automatic money-making machines, customers faced substantial financial losses, with some cases resulting in the disappearance of significant amounts of funds, including nearly 30,000 Bitcoin (BTC) valued at approximately $1.7 billion at the time. The regulator’s warning further reads:
Fraudsters are exploiting public interest in artificial intelligence (AI) to tout automated trading algorithms, trade signal strategies, and crypto-asset trading schemes that promise unreasonably high or guaranteed returns. Don’t believe the scammers. AI technology can’t predict the future or sudden market changes.
CFTC Urges Caution
In light of these increased threats, the CFTC urges individuals to exercise caution and emphasizes the importance of skepticism, especially when encountering AI-related investment opportunities promoted by social media influencers or unknown individuals online.
As the allure of AI and the cryptocurrency market continues to attract investors, individuals need to remain vigilant and stay informed about potential risks. The CFTC’s press release concluded:
Before you trust your money to trading platforms that claim AI-created algorithms can generate huge returns, you should: Research the background of the company or trader; conduct a reverse image search on key personnel to verify their identities. Research the history of the trading website by checking the age of the domain registration at lookup.icann.org. Get a second opinion. Talk the investment over with a financial advisor, trusted friend, or family member. Know the risks associated with the underlying assets. Also, consider the impact fees, spreads, and subscription costs would have on returns.
The cryptocurrency market has experienced a notable recovery, bouncing back from significant price retracements. As a result, the total market capitalization of cryptocurrencies has witnessed a 4% increase over the past 24 hours, now valued at $1.57 trillion.
As the leading digital currency, Bitcoin continues to hold a commanding position in the market. With a staggering market cap of $822 billion, Bitcoin accounts for 52.52% of the total cryptocurrency market.
Featured image from Shutterstock, chart from TradingView.com
Source: https://bitcoinist.com/cftc-issues-warning-on-ai-driven-crypto-scams/