CFTC Alerts Rise in AI and Cryptocurrency Frauds

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New Advisory from U.S. Regulators Warning about AI-Driven Scams

The Office of Customer Education and Outreach (OCEO) from the US Commodity Futures Trading Commission (CFTC) recently issued a warning regarding the increased fraudulent activities associated with artificial intelligence (AI) within the finance industry, specifically in relation to cryptocurrency. The fraudsters, under false pretenses, promise that their AI-powered tools, such as bots, trading signal algorithms, and cryptocurrency arbitrage algorithms, are capable of yielding considerable or guaranteed returns.

Rise of AI Technology Misuse

These wrongdoers manipulate the increasing influence of AI in our everyday life and exploit people’s curiosity about breakthrough technology to propagate their deceptive schemes. The advisory accentuates the considerable involvement of social media platforms and influencers in escalating the spread of misleading information about the role of AI in financial trading. The warning shares an instance of a prevalent Ponzi scheme that leveraged public interest in AI, leading to substantial losses for investors.

Social Media and Influencers Boost Misinformation

The communication further stresses how social networks and influencers contribute to the propagation of these scams. The prevalence of bots and AI-oriented trading algorithms has led to an uptick in these fraudulent activities. Substantial monetary losses to these schemes have been recorded by the CFTC, which are often seen on accounts seeking funds without proper verification.

Public Advocated to be Wary

Melanie Devoe, Director of the Office of Customer Education and Outreach, reiterated the importance of public caution in the face of the hype surrounding AI. She also shed light on the intentions of bad actors intent on deceiving unsuspecting individuals. The CFTC urges the public to remain dubious about online promotions making inflated or unrealistic promises about AI’s role in financial trading. Awareness of the signs of fraud, including offers of high or guaranteed profits, is encouraged.

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