The US Commodity Futures Trading Commission (CFTC) has issued a warning to cryptocurrency investors about the risks associated with relying on artificial intelligence (AI) trading bots. The CFTC emphasizes that AI cannot accurately predict the future, and many investors may experience significant losses by placing trust and funds in these bots. The agency advises caution against exaggerated promises made by AI trading bots, which often utilize trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technologies to attract investors. Director Melanie Devoe of the CFTC’s office of customer education and outreach highlights the prevalence of false information spread through social media platforms and influencers, urging investors to exercise skepticism and conduct thorough research before entrusting their money to trading bots or trade signal providers.
In 2023, AI-driven crypto trading bots became a focal point of discussion within the industry. Several US state watchdogs took action against an AI trading bot that claimed to generate daily returns of up to 2.2% through AI leverage. Securities regulators from Montana, Texas, and Alabama alleged that the crypto trading platform YieldTrust.ai was operating a Ponzi scheme, lacking evidence to support the existence or performance of the AI trading bot as advertised. Another case highlighted by blockchain analysis firm Arkham Intelligence involved a crypto trading bot that took on a $200 million flash loan but only made a meager $3.24 in profit.
Despite the risks and controversies surrounding AI trading bots, some major crypto exchanges, including Bitget, have been exploring their use on their own platforms. Bitget CEO Gracy Chen stated that their Commodities Trading Advisor AI bot continuously analyzes and processes historical strategy data, enabling users to make better trading choices intuitively based on a simple rate of return number and price chart. Looking ahead to 2024, there are discussions about the potential role of AI in market analysis, trading strategies, and broader technological advancements in the blockchain space.