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In a new consumer alert, the U.S. Commodity Futures Trading Commission (CFTC) warns about the misuse of artificial intelligence (AI) to lure unsuspecting individuals into fraudulent cryptocurrency investment schemes.
Specifically, these scams capitalize on the growing interest in cryptocurrency arbitrage trading by making “bold claims” of huge profits through AI algorithms. cryptomining
AI-Based Cryptocurrency Investment Scams Revealed
According to the CFTC’s press release, these actors instill the notion that algorithms created by AI can achieve “astronomical returns,” often in the tens of thousands of percentage points range, or claim a 100% success rate. These claims relate to a variety of algorithms, including automated trading robots and signal providers.
According to the CFTC, regulators have taken legal action over the years against multiple defendants who defrauded customers by marketing commodity pools, crypto assets, or investment schemes that falsely promised consistent, above-average returns through the use of AI.
Contrary to the promise of an automated money-making machine, customers faced significant financial losses, with some cases resulting in the disappearance of large sums of money, including nearly 30,000 Bitcoins worth approximately $17 billion at the time. The regulator’s warning goes further:
Fraudsters are capitalizing on the public’s interest in artificial intelligence (AI) by touting automated trading algorithms, trading signal strategies and crypto-asset trading programs that can provide unrealistically high or guaranteed returns. Don’t trust the scammers.AI technology cannot predict future or sudden market changes.Bitcoin Miner
CFTC Urges Caution
In the face of these growing threats, the CFTC urges individuals to exercise caution and emphasizes the importance of skepticism, especially when it comes to AI-related investment opportunities promoted by social media influencers or unknown individuals online.
As the appeal of AI and cryptocurrency markets continues to grow, individuals need to remain vigilant and aware of the potential risks, concludes the CFTC’s press release:
Before you entrust your money to a trading platform that claims AI-created algorithms can generate huge returns, you should: research the background of the company or trader; conduct a reverse image search of key personnel. Research a site’s trading history to verify its identity by checking the age of the domain registration at lookup.icann.org. Also, seek a second opinion by discussing the investment with a financial advisor, trusted friend or family member. In addition, the impact of fees, spreads and subscription costs on returns should be considered to understand the risks associated with the underlying asset.
Recovery of total cryptocurrency market capitalization on the daily chart. Source: total market capitalization on TradingView.com
The cryptocurrency market has experienced a significant recovery, bouncing back from a major price correction. As a result, the total market capitalization of cryptocurrencies has experienced a 4% increase over the past 24 hours and is now worth $1.57 trillion.
As the leading digital currency, Bitcoin continues to dominate the market. With a staggering market capitalization of $822 billion, Bitcoin accounts for 52.52% of the entire cryptocurrency market.
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