An AI bot that trades for you: ask where the money sits, then which key you handed over

Half of that pitch is true, which is why it works. The money really does stay in your account. The trouble is the other half.

One boundary before we start. If the person spent weeks chatting you up before inviting you into a "mentor's group", you are looking at the pig-butchering entry, which covers how people get walked in. This one files a different wrapper: less romance, more technology. The bot, the algorithm and the AI are on the table from the first message, along with the promise that you don't need to learn anything.

One question first: where is the money?

However long the sales talk runs, a bot "managed account" offer always ends with one of two requests:

• Send your funds to a platform, app or wallet they name, because that is where the bot runs. The money leaves your account.
• Keep your funds on your own exchange account, but create an API key and paste the key and secret to them. The money stays; the key goes.

The first one sounds obviously risky and the second sounds almost harmless, so warnings tend to cover only the first. We keep both in one entry because the order of questions is the same: where does the money sit, and what can the key you hand over actually do? Whether they sound like a professional desk, and how smooth the return chart looks, comes after those two.

What the word "AI" is doing in the pitch

The US Commodity Futures Trading Commission wrote a whole customer advisory about this, titled "AI Won't Turn Trading Bots into Money Machines". Its opening line describes the move: "Fraudsters are exploiting public interest in artificial intelligence (AI) to tout automated trading algorithms, trade signal strategies, and crypto-asset trading schemes that promise unreasonably high or guaranteed returns."

The same advisory puts the counterweight in one sentence: "AI technology can't predict the future or sudden market changes." Once the promise is "guaranteed", the technology behind it no longer matters.

The case the CFTC walks through is Mirror Trading International. The bot was pitched as "guaranteed at least a 10 percent monthly return". The advisory also states that "Steynberg also created fake customer accounts and balances using MetaTrader demo accounts," and that the whole thing "operated as a Ponzi scheme". So a dashboard full of profitable trades proves nothing on its own. Someone can build that screen without any trading behind it.

Route one: the money goes to their platform

They send you an app link, a website, or a wallet address, and tell you the bot lives on "their system". From the moment you send, the money is somewhere you can neither see nor control. The balance, the daily yield and the bot's trade log on that screen show whatever their server decides to show. The Mirror Trading case above is what that looks like at scale.

By this point the question is no longer whether the bot is any good. It's whether the platform is real at all. The CFTC gives one quick check: "Research the history of the trading website by checking the age of the domain registration at lookup.icann.org." A site that claims years of track record on a domain registered a few months ago has answered the question for you.

If you are already at the stage where they want one more payment before a withdrawal can go through, skip ahead to asked to pay tax before you can withdraw.

Route two: the money stays, they want a key

This route is harder to spot because it borrows a real feature. Exchanges do offer API keys so you can connect an account to outside software. Checked against Binance's own help page, the description reads: "You can view your wallet and transaction data, make trades, and deposit and withdraw funds in third-party programs."

Handing someone a key hands them whatever that key is switched on for. Viewing, trading, and, if the box is ticked, withdrawing.

Binance's security blog is blunter in its first tip: "Never share the API keys with third parties. With your API's secret key, anyone can initiate an API request on your behalf without being detected by our risk monitoring system." Requests sent with your key look like you, so the unusual-login alert you rely on may never fire.

"No withdrawal permission" is not the safety line

The reassurance you will hear is: "We only need trading permission. Withdrawals stay off, so the money can't go anywhere." The first part has an official basis. The exchange's help page says: "Adding IP access (IPv4 format) restrictions is mandatory to enable withdrawal permission." A key with no IP restriction cannot withdraw.

The same company's blog goes on, though: "Although an API key cannot be used to initiate withdrawal requests without IP whitelisting, there are other ways in which the keys can be abused. If a hacker gets access to your keys, they could use assets with a relatively small trading volume to pair trade and slowly siphon assets from your wallet."

They place orders in a market almost nobody else trades, then use your key to fill those orders from your side. Your coins end up with them, and you are left holding a token nobody wants.

At no point does a withdrawal happen, and the value is still gone. "Trade-only" means they can't send your funds out directly. It does not stop them making every trade for you, including the ones that lose to them.

One more detail tends to get waved through as a technical step. The help page states: "Unrestricted-IP-Access HMAC API Key(s) won't have any permission other than reading." That covers system-generated HMAC keys only, and only while the default security controls stay on. The same page lists three ways past it: "If you'd like to enable other permissions, please add IP access (IPv4 format) restrictions, use self-generated keys (such as Ed25519 or RSA), or disable the default security controls." So when you are told "put our server's IP in that field or the bot won't start", the real meaning is that the key will run from their machine with more than read access. Being told to switch to a self-generated key, or to turn the default security controls off, is the same red flag as being handed their IP. If they then ask you to tick withdrawals as well, you can stop evaluating.

Nothing sent yet: what to check on the spot

• Who opened the conversation? A DM, a group invite, or a reply under someone else's post pushing a bot is enough reason to stop on its own.
• "Guaranteed" and a fixed monthly figure. The CFTC advisory opens on schemes promising "unreasonably high or guaranteed returns"; the 10-percent-a-month figure comes from the Mirror Trading case it walks through.
• The website or app they want your money on. Look up its domain age before anything else.
• A request to create a key: don't. There is no halfway version where you make one "with limited permissions" for them. As above, trading alone is enough.

Our own rule at the desk is deliberately narrow. Any service that needs us to create a key and send it over before it can "start" does not exist as far as we are concerned, however good the backtest looks. We will miss the occasional legitimate tool that way, and we are fine with that trade.

The key is already out: take it back in this order

Binance's blog has a single line for this situation: "If you suspect that the security of any API key is compromised, change them immediately." Turned into steps:

1. Delete the key before you argue with anyone. Sign in from your own app or a bookmark, go to [API Management] as the help page calls it, and delete the key you gave out. If you can't tell which one it is, delete every key you don't recognise and rebuild the ones you need later.
2. Then go through your order and trade history. Look for thin pairs, tokens you have never heard of, and fills at prices that don't match the market you remember. That is roughly what a drain through pair trades leaves behind. Screenshot it and note the times; you will want them for a report.
3. Check two-factor and your withdrawal whitelist for changes. Where those settings live is covered in the beginner security setup.
4. Ignore any later offer to "restore" the account or "recover the losses". That is usually the opening of a recovery scam.

Step one is the one people put off. The moment you delete, the message comes: the bot has stopped, open positions will blow up, you are about to miss the move. Don't answer any of it. Finish deleting the key first.

If you are in the US, the CFTC's advisory is direct about where this goes: "You can report fraud to the CFTC and to the FBI." Elsewhere, report to your local police and to the exchange.

What comes before and after

• One step back: they are still chatting and haven't mentioned a bot yet. See pig-butchering and "mentor" groups.
• Route one, withdrawal blocked: see asked to pay tax before you can withdraw.
• Funds or coins already gone: reporting, notifying and keeping evidence are in the first 4 things to do after a scam.

If you were on route two and the key is already deleted, this page has done its part. The rest belongs to the entries above.