Regulators seek public input on AI scams, market influence
Regulators are shedding light on scammers leveraging the allure of artificial intelligence (AI) to promote crypto trading systems with faulty claims of high or guaranteed returns.
With the trend of using automated software for trading increasing, the Commodity Futures Trading Commission (CFTC) issued a customer advisory stressing that these AI systems cannot foresee market movements definitively.
See below.
The customer advisory titled “AI Won’t Turn Trading Bots into Money Machines” exposes the fraudulent tactics used to attract investors, recounting tales like that of Cornelius Johannes Steynberg, who swindled over $1.7 billion in Bitcoin (BTC) from unsuspecting victims.
The CFTC has subsequently advised traders to avoid seductive assurances of high gains from AI-assisted tools, warning that such exaggerated claims often fail to deliver.
Melanie Devoe of the CFTC’s Office of Customer Education and Outreach division asserts that traders should approach these AI promises with skepticism, recognizing the potential for exploitation by unscrupulous individuals to entice the unwary.
Despite these concerns, some major exchange platforms, like Bitget, continue to innovate with AI bots. Last July, Bitget CEO Gracy Chen shared that their AI systems operate by processing historical strategy data for continuous improvement.
Simultaneously, CFTC’s divisions and the Office of Technology Innovation launched a Request for Comment (RFC) to understand better AI’s current and potential uses—and its perils—in derivatives markets.
By casting a broad net for feedback, the CFTC is keen to unearth insights into AI’s role across various facets of both traditional and crypto trading—from transaction risk management to enhanced methods of market surveillance, as well as the implications within cybersecurity, analytics, and customer service spheres.
CFTC Chair Rostin Behnam emphasized the importance of aligning supervisory oversight with technological advancement, ensuring that customer protection remains paramount as markets evolve.
Behnam positioned the RFC as pivotal to the Commission’s strategic focus on fostering a data-informed approach to its regulatory interventions and oversight.
The agency also underscored the potential benefits of AI within regulatory compliance, especially for market surveillance, anti-money laundering (AML) strategies, and reporting duties.
Investors and market participants are encouraged to provide their insights by April 24, 2024, as the CFTC contemplates new regulations or guidance that may shape the future of AI in mainstream and crypto trading.
Credit: Source link
