Regulators, including the Commodity Futures Trading Commission (CFTC), are addressing the rise of scammers using artificial intelligence (AI) to promote crypto trading systems with misleading claims of high or guaranteed returns. In a customer advisory titled “AI Won’t Turn Trading Bots into Money Machines,” the CFTC warns traders against the exaggerated promises of high gains from AI-assisted tools, emphasizing the inability of these systems to definitively predict market movements.
The advisory highlights cases like that of Cornelius Johannes Steynberg, who defrauded over $1.7 billion in Bitcoin from unsuspecting victims. Melanie Devoe from the CFTC’s Office of Customer Education and Outreach urges traders to approach AI promises with skepticism, recognizing the potential for exploitation by unscrupulous individuals.
Despite concerns, some cryptocurrency exchange platforms, such as Bitget, continue to innovate with AI bots. Bitget’s CEO Gracy Chen previously shared that their AI systems use historical strategy data for continuous improvement.
Simultaneously, the CFTC has launched a Request for Comment (RFC) to better understand AI’s current and potential uses and risks in derivatives markets. The RFC aims to gather insights into AI’s role across various aspects of traditional and crypto trading, including transaction risk management, market surveillance, cybersecurity, analytics, and customer service.
CFTC Chair Rostin Behnam emphasized the importance of aligning supervisory oversight with technological advancements while prioritizing customer protection. The RFC is considered crucial for shaping the Commission’s regulatory interventions and oversight, embracing a data-informed approach.
The CFTC highlighted potential benefits of AI in regulatory compliance, particularly in market surveillance, anti-money laundering (AML) strategies, and reporting duties. Market participants and investors are encouraged to provide their insights by April 24, 2024, as the CFTC considers new regulations or guidance that may impact the future of AI in mainstream and crypto trading.
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