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Home»TRADING NEWS»Regulators seek public input on AI fraud, market impact
TRADING NEWS

Regulators seek public input on AI fraud, market impact

By Crypto FlexsJanuary 29, 20242 Mins Read
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Regulators seek public input on AI fraud, market impact
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Regulators are harnessing the power of artificial intelligence (AI) to spot scammers promoting cryptocurrency trading systems with false claims of high or guaranteed returns.

As the trend toward using automated software for trading increases, the Commodity Futures Trading Commission (CFTC) has issued a consumer advisory highlighting the inability of these AI systems to clearly predict market movements.

See below.

The customer advisory, titled “AI Doesn’t Turn Trading Bots Into Money Machines,” exposes the fraudulent tactics used to lure investors, including Cornelius Johannes Steynberg, who stole more than $1.7 billion in Bitcoin (BTC) from unsuspecting victims. The story is explained in detail.

The CFTC has since advised traders to avoid tempting assurances that they will earn high profits from AI-enabled tools, warning that such exaggerated claims often do not deliver.

Melanie Devoe of the CFTC’s Customer Education and Support Division argues that traders should approach these AI promises with skepticism and recognize the potential for exploitation by unscrupulous individuals to lure the unwary.

Despite these concerns, some major exchange platforms, such as Bitget, continue to innovate with AI bots. Last July, Bitget CEO Gracy Chen shared that his company’s AI system works by processing historical strategy data for continuous improvement.

At the same time, the CFTC’s Division and Office of Technology and Innovation launched a Request for Comments (RFC) to better understand the current and potential uses of AI in derivatives markets and their risks.

By establishing a broad network for feedback, the CFTC seeks to uncover insights into the role of AI in various aspects of traditional and cryptocurrency trading, from trading risk management to improved market surveillance methods as well as implications for cybersecurity, analytics and security. do. Customer service field.

CFTC Chairman Rostin Behnam emphasized that consumer protection remains paramount as the market evolves by balancing regulatory oversight with technological advancements.

Behnam credited the RFC as pivotal to the Commission’s strategic focus on fostering a data-driven approach to regulatory intervention and oversight.

The agency also highlighted the potential benefits of AI in regulatory compliance, particularly market surveillance, anti-money laundering (AML) strategies and reporting.

Investors and market participants are encouraged to provide their insights by April 24, 2024, as the CFTC considers new regulations or guidance that could shape the future of AI in mainstream and cryptocurrency trading.

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