U.S. CFTC Discovers Fraudulent Schemes Involving AI, Leading to $1.7 Billion Bitcoin Loss
The U.S. Commodity Futures Trading Commission (CFTC) has recently issued a warning to the public regarding cryptocurrency scams that utilize Artificial Intelligence (AI) technology. The advisory focuses on the deceptive tactics employed by fraudsters who exploit AI to entice investors into false claims, ultimately resulting in financial losses.
The CFTC’s press release, titled “Customer Advisory: AI Won’t Turn Trading Bots into Money Machines,” highlights the growing prevalence of AI scams in the cryptocurrency industry. Scammers take advantage of the public’s fascination with AI by making extravagant promises of generating substantial returns through the use of trading bots, trade signal algorithms, and crypto-asset arbitrage algorithms.
To help individuals stay vigilant, the CFTC has also provided a list of warning signs to watch out for, particularly cautioning against claims of high or guaranteed returns, as these often indicate potential crypto fraud. The widespread use of social media platforms and influencers further contributes to the dissemination of false information. The CFTC advises investors to disregard any claims made by strangers online.
The CFTC emphasizes that AI technology cannot accurately predict future changes in the crypto or financial markets. Therefore, any claims suggesting otherwise should be viewed as red flags. To assist investors in identifying and avoiding potential scams, the CFTC offers four key considerations to keep in mind.
The advisory includes a case study involving Cornelius Johannes Steynberg, who orchestrated a Ponzi scheme and stole over $1.7 billion in Bitcoins from thousands of individuals. Steynberg falsely claimed to utilize a proprietary bot trading program, guaranteeing significant monthly returns. This case serves as a prime example of how crypto scams exploit AI technology through deceitful means.
In addition to Ponzi schemes, cybercriminals employing AI utilize various other tactics, such as creating deepfakes, hijacking YouTube channels, and executing classic “Double Your Crypto” scams. Bitdefender’s recent report, “Steam-Jacking 2.0,” reveals the sophistication of these cybercriminal tactics, which involve impersonating well-known brands and figures like XRP, MicroStrategy, Elon Musk, and Binance.
In conclusion, as AI crypto scams continue to proliferate, even infiltrating the stock market, the CFTC’s Customer Advisory serves as a crucial resource to educate and remind investors of the potential risks involved. The CFTC’s Office of Customer Education and Outreach (OCEO) is dedicated to assisting customers in protecting themselves from fraud. Through outreach and education initiatives, the OCEO collaborates with regulators and consumer protection groups. The advisory encourages individuals to report any suspicious activities or information, promoting transparency and accountability.
Tags: Hacks