Investors on the hunt for their next massive cryptocurrency gain have been warned against relying on artificial intelligence (AI) trading bots to deliver. Despite the surge in popularity, the United States Commodities and Futures Trading Commission (CFTC) reiterates that AI cannot predict the future.
In a recent statement published by the CFTC titled Customer Advisory Cautions the Public to Beware of Artificial Intelligence Scams, the agency advises crypto investors aspiring for significant returns this year to avoid being lured by exaggerated promises from AI.
Particularly, those promising impressive yields by 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 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.
Last year, 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 claims it can.
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 Cointelegraph that its Commodities Trading Advisor (CTA) AI bot operates by continuously receiving historical strategy data, analyzing and processing the data, thereby realizing self-learning.
Make better choices while spending less time learning complex trading strats.
— Gracy Chen @Bitget (@GracyBitget) July 27, 2023
✅ Trading should be easy to access for everyone.
Super excited to show you #Bitget AI bots!! pic.twitter.com/a82vF2JhnX
"So AI strategies help users choose and create strategies more intuitively by only needing a simple rate of return number and price chart, eliminating the need to fill in complex parameters like in algorithms," she stated.
Meanwhile, at the beginning of this year, Cointelegraph asked ChatGPT if Bitcoin’s (BTC) price could hit $100,000 this year and how AI might play a role in reaching this result.
ChatGPT explained that AI could play a role through its influence on market analysis, trading strategies, and broader technological advancements in blockchain.
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