Artificial intelligence and deepfakes pose a “real risk to the markets,” warned Wall Street’s leading regulator.
Testifying before the Senate Banking Committee on Tuesday, U.S. Securities and Exchange Commission Chair Gary Gensler said that new technologies could “challenge” laws in the States.
The regulator even said that a deepfake of himself was put out in the summer by someone “trying to influence stock market prices or crypto prices one way or the other.”
“I think we have good laws, but these new technologies will challenge these laws,” he said. “If you’re using AI and you’re doing deepfakes in the market, that’s a real risk to the markets,” he continued, adding that “fraud is fraud.”
Deepfakes are AI-generated images, videos, and audio created to deceive people. Scammers are increasingly using the technology to con people by posting fake but convincing content.
Last month, global accounting firm KPMG said in a report that scammers are increasingly targeting the business sector with deepfakes, citing one 2020 example when a company branch manager transferred $35 million funds to scammers after believing it was his boss on the phone making the demand.
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AI does have a role to play on the other side, however. Gensler added in his testimony that the SEC already uses AI to conduct market surveillance.
“We already do [use AI] for some market surveillance and enforcement actions to look for patterns in the market,” he said, adding that the SEC had asked Congress for more money “to help build up our technology budget” and continue using such tools.
The SEC is currently developing rules to regulate the use of AI on trading platforms due to the risk of conflicts of interest, Gensler said back in July.