Investors seeking substantial cryptocurrency gains have received a stern warning against placing undue trust in artificial intelligence (AI) trading bots.
Despite the rising popularity of these automated tools, the United States Commodity Futures Trading Commission (CFTC) has emphasized that AI cannot accurately predict the future.
In a recent press release, the CFTC cautioned crypto investors looking for lucrative returns in 2024 to exercise caution and avoid falling prey to exaggerated promises made by AI trading bots.
The agency specifically highlighted the alluring offers made by bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-driven technologies.
Melanie Devoe, director of the CFTC’s office of customer education and outreach, pointed out that the prevalence of social media platforms and influencers has made it easier for fraudsters to disseminate false information.
Devoe stressed the importance of remaining skeptical of hype surrounding AI in crypto trading, as it has become a conduit for malicious actors to exploit inexperienced investors.
Furthermore, the CFTC advised investors to conduct thorough background checks on companies or traders before entrusting their capital to trading bots or signal providers.
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The year 2023 witnessed a significant focus on AI-powered crypto trading bots within the industry.
In April, state regulators from Montana, Texas, and Alabama took legal action against YieldTrust.ai, an AI trading bot, alleging it was running a Ponzi scheme by making unsubstantiated claims of daily returns of up to 2.2%.
Additionally, blockchain analysis firm Arkham Intelligence highlighted a case in June where a crypto trading bot borrowed $200 million through a flash loan, only to secure a paltry profit of $3.24.
However, some major crypto exchanges, including Bitget, have been exploring the use of AI bots on their platforms.
Bitget CEO Gracy Chen explained that their Commodities Trading Advisor AI bot continually receives and analyzes historical strategy data, enabling self-learning and simplifying strategy creation for users.
As 2024 began, the question of whether Bitcoin could reach $100,000 this year arose. AI was mentioned as a potential catalyst, influencing market analysis, trading strategies, and broader technological advancements in blockchain.
While AI holds promise in the crypto world, investors are urged to exercise caution and not rely solely on AI trading bots for their financial decisions.
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