CFTC Warns Investors About AI Trading Scams

The Commodity Futures Trading Commission (CFTC)’s Office of Customer Education and Outreach have issued an advisory warning the public about AI scams. The advisory titled, ‘Customer Advisory: AI Won’t Turn Trading Bots into Money Machines’ warns how AI technologies can be used to defraud investors with false claims.

“With the growth of the use of AI in everyday life, scammers are making claims that it can generate huge returns using bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technology. The prevalence of social media platforms and ‘influencers’ makes it even easier for fraudsters to spread false information,” the Commission said.

The advisory outlines crucial factors for investors to contemplate, such as researching the company or trader's background, before entrusting their funds to trading bots or trade-signal providers.

The CFTC's Divisions of Market Oversight, Clearing and Risk, Market Participants, and Data, along with the Office of Technology Innovation, have issued a request for comment (RFC) to enhance their understanding of the existing and prospective applications and risks of AI in the derivatives markets regulated by the CFTC.

“This RFC will further support the CFTC as we strategically identify the highest priorities and return-on-investment projects with AI use cases internally to optimize our data-driven approach to policy, surveillance, and enforcement,” CFTC Chairman Rostin Behnam said.

Moreover, the CFTC, through the RFC, seeks insights into both current and potential use cases of AI and the corresponding risks to the broader financial system.