American regulators have issued a stern warning to would-be cryptocurrency investors: do not put your faith in AI trading bots; doing so will almost certainly lead to a complete and utter loss of capital.
Those looking to make a killing in the cryptocurrency market should not put their faith in trading bots powered by artificial intelligence (AI). The CFTC has stressed again that AI is not capable of foretelling the future, despite the fact that it has recently become quite popular.
Investors in cryptocurrencies who are hoping to make a killing this year should be wary of AI scams that make ambitious claims, according to an official statement issued by the Commodity Futures Trading Commission (CFTC).
Especially those who claim to be able to reap enormous profits with the use of bots, trading signal algorithms, crypto-asset arbitrage algorithms, and other forms of artificial intelligence.
“The widespread use of social media platforms and “influencers” further facilitates the dissemination of misinformation by fraudsters.”
Melanie Devoe, who heads the consumer education and outreach unit at the CFTC, warns investors to be “wary of the hype” and says that AI is just another tool scammers use to take advantage of inexperienced traders.
Investors should check a trader’s or company’s credentials before putting their money into trading bots or trade-signal providers, according to the agency.
Artificial intelligence (AI)-powered crypto trading bots were all the rage last year. A number of state watchdogs in the United States intervened in April 2023 against an AI trading bot that claimed to be able to use AI to provide daily returns of up to 2.2%.
Montana, Texas, and Alabama securities authorities claimed that YieldTrust.ai, a cryptocurrency trading platform, was running a Ponzi scheme as there was no evidence to support the promises made by the marketing campaign about the existence or performance of the AI trading bot.
In the meantime, Arkham Intelligence, a blockchain research organization, brought attention to a case in June 2023 involving a crypto trading machine that borrowed $200 million but only made $3.24.
On the other hand, Bitget and other big crypto exchanges have been looking at AI bots for their own platforms.
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