SEC issues warning about investment scams created using AI

SEC cautions the public against falling victim to scams driven by artificial intelligence (AI) in the investing sector. The Securities and Exchange Commission (SEC) in Nigeria is warning potential investors to be wary of the increasing prevalence of AI-generated investment scams designed to deceive individuals with fraudulent promises and celebrity endorsements.

The SEC highlighted platforms such as CBEX, Silverkuun, and TOFRO as operating illegally by promoting AI-based trading systems that guarantee unrealistic returns. Despite lacking registration and regulation by the SEC, these platforms persist in misleading the public with false claims of AI-powered investments, posing significant risks to unsuspecting investors as a result.

Fraudsters have turned to innovative techniques utilizing deepfake videos and AI-generated content to entice victims, manipulating videos featuring prominent figures like politicians, celebrities, and TV hosts to create an illusion of credibility for fraudulent platforms. These fabricated endorsements and testimonials, made to appear authentic through AI, have made traditional fraud detection methods less effective, necessitating the use of technologically-driven regulation and an increase in public awareness to combat this trend effectively.

To combat this growing threat, the SEC has outlined its adoption of advanced surveillance systems capable of real-time detection of fraudulent activities. The Commission is also strengthening partnerships with the Central Bank of Nigeria (CBN) and the Nigerian Financial Intelligence Unit (NFIU) to facilitate data-sharing and joint enforcement actions to protect investors from potential scams.

Moving from a reactive to a predictive oversight approach, the SEC emphasized the importance of the advanced measures being taken to combat fraud and systemic risks in the market effectively. The Commission has also engaged with social media companies to crack down on misleading advertisements and warned influencers against promoting unlicensed investment schemes, imposing regulatory sanctions or prosecution on those found complicit in promoting illegal platforms.

Encouraging Nigerians to exercise caution before investing, the SEC advises individuals to treat any scheme promising daily profits, zero risks, or celebrity endorsements as suspicious. Investors are urged to verify the registration status of investment platforms on the SEC website and match registration numbers displayed on company websites with details on the portal to avoid falling victim to fraudulent platforms operating solely through Telegram or WhatsApp.

Additionally, any suspicious platforms or misleading advertisements should be reported directly to the SEC via email, phone, or the online complaints portal provided by the Commission. By taking these precautions and remaining vigilant, investors can protect themselves from falling prey to AI-generated investment scams and safeguard their financial well-being in the market.