U.S. state regulators call AI trading dApp a ponzi scheme, here’s why
- Securities regulators from Montana, Texas, and Alabama filed a lawsuit against the cryptocurrency trading website YieldTrust.ai.
- AI has become much more well-known since the 30 November debut of ChatGPT AI by AI research company OpenAI.
The cryptocurrency trading platform YieldTrust.ai is being sued by securities authorities from Montana, Texas, and Alabama for perpetrating a Ponzi scheme.
YieldTrust.ai and its Romanian owner, Stefan Ciopraga, claimed the decentralized application called “YieldBot” is “powered by cutting-edge artificial intelligence.”
They further stated that it is “capable of executing 70 times more trades with 25 times higher profits than any human trader could,” according to statements from state regulators on 4 April.
Where is the problem?
The regulators claim YieldTrust failed to show investors “any proof” that the AI-driven bot even existed. YieldBot was created for Binance’s BNB Smart Chain and could interface with staking programs to produce returns for new investors of up to 2.2% per day, according to Montana’s regulator, who issued the cease-and-desist order.
“[Analyzing] the crypto markets and – in milliseconds – make its own trading decisions, autonomously choosing from hundreds of trading methods and chaining them together to create unique strategies – achieving an exhilarating performance.”
The deploying team “retained sufficient control to block users from withdrawing their assets,” according to the state regulators. The regulators also proclaimed that an independent firm that audited YieldBot’s smart contract found it to be dangerous.
In addition, the securities commissioner of Montana, Troy Downing, tweeted on 4 April that scammers are leveraging the hype surrounding AI to deceive investors.
The AI revolution
Furthermore, the website for YieldTrust.ai was pulled down and its Twitter account was deleted. Since the 30 November launch of the ChatGPT chatbot by research firm OpenAI, AI has gained significantly more notoriety, accessibility, and hype.
Also, ChatGPT has proven to be a powerful tool despite occasional errors. The most recent iteration was able to pass the bar, ace SATs, and even spot vulnerabilities in smart contracts.
In recent years, the cryptocurrency market has expanded considerably, promising to revolutionize the financial sector. Bitcoin trading bots’ advanced Artificial Intelligence (AI) tools that have automated the cryptocurrency trading process are at the forefront of this revolution.