The Commodities Futures Trading Commission has urged investors to be wary of artificial intelligence-created algorithms which promise dubious returns on crypto asset investments. The commission said investors should conduct background research on the companies or individuals who offer such AI-created trading algorithms.
Scammers Use Social Media and Influencers to Spread False Information
The Commodity Futures Trading Commission (CFTC) has cautioned investors to be wary of artificial intelligence (AI) created software or algorithms that “yield 100 per cent ‘win’ rates.” The CFTC has identified crypto-asset trading schemes, trade signal strategies, or automated trading algorithms as some of the AI-created software which scammers are using to target investors.
In a statement issued through the CFTC’s Office of Customer Education and Outreach (OCEO), the commission also voiced its concerns over the growing number of cases in which criminals use the AI hype to steal from unsuspecting users.
According to the statement, this problem is further compounded by scammers’ spread of false information via social media platforms and through the so-called influencers. Unlike conventional media or advertising firms, influencers and social media platforms are not subject to regular marketing or advertisement rules. The statement nevertheless lists some steps investors should always take before committing their funds.
Importance Background Research
One such step is doing background research on a company or trader that is promising an AI-based investing or trading bot. Investors can also research the trading history of the company selling the AI-created algorithms. Furthermore, investors should also consider getting a second opinion as well as understanding the risks involved.
Remaking on why her office issued the advisory, OCEO Director Melanie Devoe, said:
When it comes to AI, this advisory is telling investors, ‘Be wary of the hype.’ Unfortunately, AI has become another avenue for bad actors to defraud unsuspecting investors.
In addition to warning investors about investment schemes or promotions that offer above-average or guaranteed returns, the OCEO advisory also helps investors identify and avoid potential scams. The advisory also reminds investors that no tool or technology, including AI, can predict the future.
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