CFTC Customer Advisory Cautions the Public to Beware of Artificial Intelligence Scams

CFTC Customer Advisory Cautions the Public to Beware of Artificial Intelligence Scams

The Commodity Futures Trading Commission (CFTC) has issued a crucial customer advisory, warning the public about the rising threat of Artificial Intelligence (AI) scams targeting investors. The advisory, titled "Customer Advisory: AI Won’t Turn Trading Bots into Money Machines," sheds light on the deceptive tactics employed by fraudsters who exploit the potential of AI technology to lure investors into handing over their assets under false pretenses.

In an era where AI is becoming increasingly prevalent in everyday life, scammers are capitalizing on its allure, making grandiose claims of generating substantial returns using trading bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technologies. The widespread use of social media platforms and the influence of online personalities make it easier for these fraudsters to disseminate false information. The advisory emphasizes that claims of high or guaranteed returns are red flags, cautioning investors to be wary of strangers promoting such assertions online.

Melanie Devoe, Director of the Office of Customer Education and Outreach (OCEO), remarked, “When it comes to AI, this advisory is telling investors, ‘Be wary of the hype.’ Unfortunately, AI has become another avenue for bad actors to defraud unsuspecting investors.”

The advisory serves as a guide for investors to identify and avoid potential scams, emphasizing that AI technology cannot accurately predict the future. It provides four crucial considerations for investors, including researching the background of a company or trader before entrusting their funds to trading bots or trade-signal providers. Scammers frequently make exaggerated claims of algorithms producing astronomical returns, sometimes reaching tens of thousands of percent or promising a 100 percent "win" rate. These misleading assertions are often associated with algorithms that automatically execute trades, commonly known as "bots," or algorithms providing buy and sell signals to subscribers.

Over recent years, the CFTC has uncovered several cases where defendants defrauded customers by falsely marketing commodity pools, digital assets, or "investment programs" that pledged regular, above-average returns through the use of AI. However, instead of delivering on these promises, customers suffered significant losses, including one case where nearly 30,000 bitcoins, valued at about $1.7 billion at the time, were lost.

To safeguard their investments, the advisory encourages investors to:

  1. Research the background of the company or trader, including conducting a reverse image search on key personnel to verify their identities.
  2. Investigate the history of the trading website by checking the age of the domain registration at
  3. Seek a second opinion by discussing the investment with a financial advisor, trusted friend, or family member.
  4. Understand the risks associated with underlying assets and consider the impact of fees, spreads, and subscription costs on potential returns.

Investors are also cautioned to be skeptical of the hype surrounding AI, particularly when promoted by social media influencers and strangers met online. The advisory concludes by urging individuals to report any instances of fraud to both the CFTC and the FBI.

As the use of AI continues to grow, the CFTC remains vigilant in its efforts to protect investors from falling victim to sophisticated scams that exploit the allure of artificial intelligence.

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