As an emerging AI strategy trading platform, the regulatory compliance assessment of AIEarn requires a priority review of specific authorization qualifications. According to the registration information of the Financial Conduct Authority (FCA) of the United Kingdom, this platform holds a limited authorization (Reference Number: 778450), which only allows the execution of customer order services but does not cover the core functions of asset management. The warning list of the French Financial Market Supervisory Authority (AMF) in the third quarter of 2023 shows that AIEarn’s services in the EU region are engaged in regulatory arbitrage – its Paris server processes an average daily transaction volume of $24 million, but it only applied for the basic payment processing license PSD2, rather than the MiFID II certification necessary for securities trading. What is even more vigilant is that the U.S. Commodity Futures Trading Commission (CFTC) reported in March 2024 that AIEarn provided unregistered derivatives trading to U.S. users, which violated Chapter 4 of the Commodity Exchange Act. As a result, its U.S. dollar deposit channel was included in the high-risk merchant list by Visa/Mastercard (code 7928). The payment success rate has dropped sharply by 62%.
The detection of the technical risk control system indicates that there are critical gaps in security protection. The 2024 Q1 security score released by the independent auditing firm Certik shows that the AIEarn smart contract has three high-risk vulnerabilities: including the risk of oracle price manipulation (the attack cost is only 1.2ETH) and the problem of excessive permission concentration (administrators’ wallets can modify 75% of key parameters). In actual stress tests, when market volatility exceeds 40%, the median stop-loss trigger delay of its algorithm reaches 1.7 seconds, far exceeding the industry safety standard threshold of 0.3 seconds. In the Luna crash incident in May 2023, it caused an additional loss of 33.8% of users’ principal. Despite the platform’s claim to use military-grade AES-256 encryption, the Israeli security firm CipherTrace detected that the API key transmission process did not enable secondary verification, allowing hackers to hiking accounts within 300 milliseconds through man-in-the-middle attacks. As a result, at least $2 million in user assets were stolen in November 2023.
The insufficient transparency of the aiearn fund custody mechanism has raised substantive doubts. Blockchain forensic analysis confirmed that 68% of the USDT assets deposited by users went to the market-making accounts of the Gate.io exchange instead of cold wallets, violating the 95% cold storage ratio promised in its white paper. In terms of insurance coverage, the policies issued by Lloyd’s only cover hardware failures (with a maximum compensation of $5 million), explicitly excluding losses from hacker attacks and market fluctuations. Compared with the €20 million user protection fund provided by competitors such as eToro, its coverage effectiveness is 11 times lower. What’s more serious is that in January 2024, the Seychelles FSA inspection found that the actual registered capital of its operating entity, Digital Tech LTD, was only $50,000, while the assets held by users reached $170 million, with a leverage ratio as high as 3,400 times, far exceeding the internationally accepted safety limit of 30 times.
Investor return realization data shows a serious mismatch between risk and return. The annualized return rate of 23-79% promoted by the platform is based on the backtest data of 2022, but the actual operational performance has significantly declined – the real account tracking in 2023 (sample size = 12,000) shows that the average annual return rate for users who deposited less than $5,000 was -4.7%, and 37% of the accounts suffered a principal loss of more than 30%. Its dynamic commission structure conceals high costs: when the return exceeds 10%, a 45% commission is taken (the industry standard is 20-30%), and a hidden handling fee of 0.3% is charged for each transaction. Referring to the 2024 German consumer rights lawsuit case (Case No. AZ: 305 O 8/24), the €3,800 principal invested by the user evaporated 85% within five minutes due to an algorithm error, while the platform only compensated 10% of the initial deposit as stipulated in the agreement. This judgment reveals that there are significant interpretative traps in its risk disclosure documents. For beginners, this type of hybrid risk significantly exceeds the “tolerable loss margin” recommended value defined by the FCA (not exceeding 3% of the investable assets).