According to a report from BeInCrypto, On October 4th, the Commodity Futures Trading Commission (CFTC) will host a virtual event, “Technology and Fraud: Stopping Scams in a Digital World,” as part of World Investor Week, October 2nd through October 9th.
The first panel of the event, “Exploring Effective Social Media Investment Scam Interventions,” will address one of the most rampant dilemmas of the online experience today.
Per the CFTC’s announcement, the first segment of the event will focus on explaining why “more people lose money to frauds on social media than all other forms of engagement.” The panel will discuss the current fraud trends, which typically include “romance scams and digital commodity-related frauds". This panel will also shed light on “social media mechanisms that enable fraud targeting.”
According to BeInCrypto, last year, fraudulent crypto investment offerings hit levels unseen before. The most common scams were those where an unknown entity coaxed someone online to invest via a website that looked upstanding, only to leave the investor a victim.
Such scams are usually rooted in “pig butchering”. This is where strangers take advantage of a relationship formed online, often under the pretense of friendship or romance, and then exploit the victim’s trust in the end.
Last year, crypto investment fraud took Americans for $2.57 billion, according to a Carlson Law report. The cumulative amount lost to investment scams reached $3.82 billion.
In Canada, 35% of those active in crypto who own and trade it have been victim to scams, according to the findings of researchers at Toronto Metropolitan University.
Another segment the CFTC will be hosting is a segment on the suggestion of artificial intelligence for investing, “Is AI for Investors Road-Ready?” This segment will delve into “financial regulators and experts discussing the questions investors have and insights regarding AI-fueled financial services.” Questions explored by the panel will be, “Is AI ready to take the wheel? What should I look out for? How do I know if I am being scammed?”
The session will closely examine investors’ understanding of the extent to which AI may take charge of regular trading activity, alongside the perils of AI deepfakes and other fraudulent trappings.
Jorge Herrada, director of the CFTC’s Office of Technology Innovation, described the rise of AI in the investment world as filled with “promise and pitfalls.”
“Like any fast-moving technology, education is critical to understand the capabilities of AI, when it is appropriate to use, and how to avoid being scammed,” he said.
The CFTC via the Office of Customer Education and Outreach (OCEO) says that it is “dedicated to helping customers protect themselves from fraud or violations of the Commodity Exchange Act through the research and development of effective financial education materials and initiatives.”
Despite the “warm words” of concern, many believe the regulator has overreached its legal mandate when scrutinizing the happenings of decentralized finance (DeFi) firms.
Coinbase CEO Brian Armstrong has voiced his position on the matter, urging DeFi players not to settle with the CFTC. Instead, to confront them in court and to scrutinize the CFTC’s jurisdictional reach under the Commodity Exchange Act.
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