Investors searching for their next massive cryptocurrency profits have been warned against relying on artificial intelligence (AI) trading bots to deliver. Despite a surge in popularity, the United States Commodity Futures Trading Commission (CFTC) reiterates that AI cannot predict the future.
In a recent press release, the CFTC advises crypto investors aspiring for significant returns in 2024 to avoid being lured by exaggerated promises from AI trading bots.
The agency highlights those promising impressive yields using bots, trade signal algorithms, crypto-asset arbitrage algorithms and other AI-assisted technology.
“The prevalence of social media platforms and “influencers” makes it even easier for fraudsters to spread false information.”
Melanie Devoe, director of the CFTC’s office of customer education and outreach, emphasizes that investors should be “wary of the hype,” reiterating that AI has become another way for malicious actors to take advantage of novice investors.
Meanwhile, the agency further noted that investors should research the background of a company or trader before trusting their money with trading bots or trade signal providers.
In 2023, AI-driven crypto trading bots were a major focal point of discussion in the industry.
In April 2023, several U.S. state watchdogs took action against an AI trading bot, claiming it could generate returns of up to 2.2% a day through leveraging AI.
Securities regulators from Montana, Texas and Alabama alleged that crypto trading platform YieldTrust.ai was operating a Ponzi scheme, as it didn’t have any proof that the AI trading bot even existed or could perform at the level that the marketing campaign claimed it could.
Related: Crypto thieves will deploy more convincing AI scams in 2024, firms warn
Meanwhile, in June 2023, there was a case highlighted by blockchain analysis firm Arkham Intelligence where a crypto trading bot took on a $200 million flash loan to secure a mere $3.24 in profit.
However, major crypto exchanges, such as Bitget, have been exploring the use of AI bots on their own platforms.
In July 2023, Bitget CEO Gracy Chen told…
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