Crypto scammers used AI to create a fake CEO, regulators say

[ad_1]

Artificial intelligence is all the rage right now and crypto scams haven’t slowed down one bit. And allegedly, some scammers are crushing them to deceive and defraud potential investors, including creating a fake AI-generated CEO to try to fool people.

This week, the California Department of Financial Protection and Innovation (DFPI) announced its latest efforts to protect residents from crypto scams, sending cease-and-desist letters to five companies it says are attempted to ride the AI ​​hype train.

The agencies’ latest targets are Maxpread Technologies, Harvest Keeper, Visque Capital, Coinbot and QuantFund, which the DFPI has accused of each offering unqualified securities and making false promises to investors. The DFPI accused the companies of making exaggerated claims about generating high returns using AI for crypto trading, and added multi-level marketing tactics to lure unsuspecting victims.

In addition to trying to scam investors out of money, Maxpread Technologies allegedly tried to trick investors into the identity of the CEO by using a fake AI-generated avatar programmed to recite a script.

In a YouTube video posted to his official Maxpread account on April 8, a claimed CEO named Michael Vanes gives an address on the company’s launch. But the agency says it’s not a real person; The real CEO of Maxpreads is actually Jan Gregory, whom the company had called its Chief Marketing Officer and Chief Brand Officer.

A screenshot showing the alleged AI-generated fake CEO of Maxpread. Image: California DFPI

Another company, Harvest Keeper, reportedly hired an actor to play its lead with no AI in sight in the case, although the company claimed to use AI to maximize returns from crypto trading.

Scammers are taking advantage of the recent buzz around artificial intelligence to lure investors into fake schemes, DFPI Commissioner Clothilde Hewlett said in a statement. We will continue our efforts to protect California consumers and investors by prosecuting these unscrupulous actors.

Calling them Ponzi schemes, the California regulator said investors were told that if they invested funds, the firms would use their knowledge, skills, experience and AI assistance to trade crypto assets and generate incredible profits for investors.

In each case, these claims are false, the DFPI wrote, saying the companies promised between 0.6% and 4.81% daily ROI.

The cease and desist letters are the latest moves by California regulators to stamp out crypto crime in the state. Following FTX’s collapse, the DFPI joined other state regulators in opening an investigation into the cryptocurrency exchange and its founder, Sam Bankman-Fried. In December, the DFPI ordered MyConstant to stop offering certain crypto products because the DFPI banned the sale of securities, including its main lending platform and interest-bearing accounts.

The named entities were ordered to cease operations in California because they violated securities law, a DFPI spokesperson told Decrypt. This means that it is prohibited to sell or even offer investments like these to California residents.

Although it was targeted by the California agency, Maxpread Technologies’ website claims that it and its affiliates do not target customers or operate in the United States. Maxpread, Harvest Keeper, Visque Capital, Coinbot and QuantFund did not immediately respond to Decrypts’ requests for comment.

Stay up to date with crypto news, get daily updates in your inbox.

[ad_2]