CFTC Advises Caution on AI Trading Bots

CFTC warns investors against relying on AI-powered trading bots, emphasizing that AI cannot predict the future.

The United States Commodity Futures Trading Commission (CFTC) has cautioned investors against relying on trading bots powered by artificial intelligence (AI) to produce results, as they cannot predict the future.

The CFTC has reiterated that artificial intelligence cannot predict the future, although its popularity has increased.

The CFTC issued a press statement not too long ago in which it advised cryptocurrency investors who are looking to make substantial returns in 2024 to avoid being enticed by artificial intelligence trading bots that make exaggerated promises.

“The prevalence of social media platforms and “influencers” makes it even easier for fraudsters to spread false information.”

The organization promotes the use of bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other artificial intelligence-based technologies that promise exceptional profits.

Melanie Devoe, the head of the office of consumer education and outreach at the Commodity Futures Trading Commission (CFTC), reiterates that artificial intelligence has become another opportunity for malevolent actors to take advantage of beginner investors.

CFTC underlines that investors should be “wary of the hype.” While this was happening, the agency also mentioned that before putting their money into trading bots or trade signal providers, investors should educate themselves on the history of the company or trader they are considering investing in.

Artificial intelligence (AI)-driven cryptocurrency trading bots were a key topic of conversation in the business in 2023. There were numerous state watchdogs in the United States that took action against an artificial intelligence trading bot in April 2023.

They claimed that the bot could make returns of up to 2.2% each day by utilizing AI. Securities authorities from Montana, Texas and Alabama accused YieldTrust.ai, a cryptocurrency trading platform of running a Ponzi scheme.

The CFTC said that YieldTrust.ai did not possess any evidence to support the claim that the artificial intelligence trading bot existed or could perform at the level that the marketing campaign promised it could.

While this was going on, in June 2023, a blockchain analysis company called Arkham Intelligence brought to light a situation in which a cryptocurrency trading bot had taken out a flash loan for the amount of $200 million to secure a profit of only $3.24.

However, large cryptocurrency exchanges like Bitget have been investigating the possibility of implementing artificial intelligence bots on their platforms.

According to statements made by Gracy Chen, CEO of Bitget in July 2023, the Commodities Trading Advisor AI bot operates by continuously acquiring previous strategy data, analyzing and processing the data, and ultimately achieving self-learning.

Therefore, artificial intelligence strategies enable consumers to select and construct strategies more naturally. All that is required is a straightforward rate of return figure and price chart, which eliminates the need to fill in complex parameters like those found in algorithms, as Chen explained.

ChatGPT noted that artificial intelligence might potentially play a role because of the impact it has on market analysis, trading methods, and improvements in blockchain technology that are more general.