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Beware Of AI Crypto Trading Bot Scams, CFTC Warns
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Beware Of AI Crypto Trading Bot Scams, CFTC Warns

  • The CFTC has cautioned investors that AI trading bots promising huge crypto profits are often scams.

The U.S. Commodity Futures Trading Commission (CFTC) cautioned cryptocurrency investors this week not to rely on artificial intelligence (AI) trading bots that promise astronomical profits.

“Be wary of the hype,” said Melanie Devoe, director of the CFTC’s Office of Customer Education and Outreach. “AI has become another avenue for bad actors to defraud unsuspecting investors.”

The warning comes on the heels of alleged AI crypto scams last year, like YieldTrust.ai, that regulators accused of operating Ponzi schemes. 

According to a 2023 case highlighted by blockchain analysis firm Arkham Intelligence, a bot took a $200 million flash loan but only secured $3.24 in profit.

See Also: Finnish Authorities Reportedly Track Monero Transactions In High-Profile Hacking Case

While major exchanges like Bitget are exploring AI applications for crypto trading, the technology’s limitations persist.

The CFTC advisory aims to help investors recognize potential AI crypto scams exploiting arbitrage algorithms or social media hype. Retail traders should research providers thoroughly before trusting money to algorithms making big yield claims.

The agency warns that despite surging popularity, AI cannot foresee sudden market changes. So the CFTC reiterates crypto investors should avoid AI trading bots promising the future this year.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.