The Commodity Futures Trading Commission’s Office of Customer Education and Outreach (OCEO) has issued a cautionary advisory alerting the public to the proliferation of Artificial Intelligence (AI) scams targeting investors. The advisory, titled "Customer Advisory: AI Won’t Turn Trading Bots into Money Machines," underscores how these scams leverage the allure of AI technology to deceive investors with false promises of lucrative returns.

Scammers' Tactics: False Promises and Exploitation

As AI becomes increasingly integrated into daily life, scammers exploit its potential, making audacious claims of substantial returns through trading bots, trade signal algorithms, and crypto-asset arbitrage algorithms. The prevalence of social media platforms and the influence of "influencers" facilitate the dissemination of misinformation, making it easier for fraudsters to lure unsuspecting investors.

Melanie Devoe, the Director of the OCEO, emphasized the need for vigilance: "When it comes to AI, this advisory is telling investors, ‘Be wary of the hype.’" Devoe highlighted the unfortunate reality that AI has become another avenue for bad actors to defraud unsuspecting investors.

The advisory notice aims to help investors recognize and avoid potential scams, underscoring that AI technology cannot predict the future. It provides guidance, including the importance of researching the background of companies or traders before entrusting funds to trading bots or signal providers.

CFTC Customer Advisory Cautions the Public to Beware of Artificial Intelligence Scams: https://t.co/4SI2hwOPWq

— CFTC (@CFTC) January 25, 2024

Financial Education Initiatives: Equipping Customers against Fraud

The Office of OCEO is committed to empowering customers to protect themselves from fraud or violations through the development of effective financial education materials and initiatives. The OCEO engages in outreach to retail investors, traders, industry organizations, and the agricultural community, often collaborating with federal and state regulators and consumer protection groups.

Customers and individuals are encouraged to report suspicious activities or information, such as possible violations of commodity trading statutes and regulations, to the Division of Enforcement through whistleblower tips or complaints on the CFTC's website.

The advisory includes a case study highlighting the fraudulent activities of Cornelius Johannes Steynberg, who orchestrated a Ponzi scheme that exploited public interest in AI, resulting in significant losses for investors.

Before entrusting funds to platforms claiming AI-generated returns, investors are advised to conduct thorough research, seek second opinions, and understand associated risks. They are urged to exercise caution, particularly regarding hype promoted by social media influencers and online strangers.

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