The Californian Department of Financial Protection And Innovation (DFPI) issued cease and desist orders against five companies profiting from the hype around AI to attempt to dupe gullible investors. All Hype, Little Info According to the regulator, all five companies violate securities law by offering unregistered securities to the public. Scammers like to deceive investors by using phony CEOs, sham algorithms, & Ponzi schemes. Today, we’ve issued desist and refrain orders to five entities/individuals who violated CA securities laws. For more information: https://t.co/gj13z2OE4G#investing #hyip #Cryptonews pic.twitter.com/MXHPYwVIny — CA Department of Financial Protection & Innovation (@CaliforniaDFPI) April 19, 2023 Furthermore, the firms involved are accused of lying
Topics:
Jordan Lyanchev considers the following as important: AA News, United States
This could be interesting, too:
Wayne Jones writes Bad News for Crypto? Elizabeth Warren to Succeed Sherrod Brown on House Banking Committee
Martin Young writes Ethereum’s Modular Strategy: Short-Term Pain, Long-Term Gain, Says Research
Wayne Jones writes DOJ Seeks M in Crypto from Binance Over FTX Bribery Allegations Involving SBF
Chayanika Deka writes Bitcoin Wallet Awakens After 13 Years, Transfers .67M Amid Market Surge
The Californian Department of Financial Protection And Innovation (DFPI) issued cease and desist orders against five companies profiting from the hype around AI to attempt to dupe gullible investors.
All Hype, Little Info
According to the regulator, all five companies violate securities law by offering unregistered securities to the public.
Scammers like to deceive investors by using phony CEOs, sham algorithms, & Ponzi schemes. Today, we’ve issued desist and refrain orders to five entities/individuals who violated CA securities laws. For more information: https://t.co/gj13z2OE4G#investing #hyip #Cryptonews pic.twitter.com/MXHPYwVIny
— CA Department of Financial Protection & Innovation (@CaliforniaDFPI) April 19, 2023
Furthermore, the firms involved are accused of lying to their customers by omission, misrepresenting, or even allegedly outright falsifying their financial model.
Predictably, all five companies offered high-yield investments, often promising minimum returns every single day. Not only is this a red flag – since guaranteed returns on investments are pretty much impossible to achieve – the promised minimum ROIs were larger than one could reasonably hope to achieve even by betting on blue-chip opportunities.
The twist? According to spokespeople for these companies, the promised results could be achieved with the help of AI.
Cease and Desist Orders Issued
According to DFPI Commissioner Clothilde Hewitt, the targeted entities are using the recent hype around AI LLMs to entice investors into making potentially grave errors.
“Today’s enforcement actions continue the DFPI’s crack down on investor fraud. Scammers are taking advantage of the recent buzz around artificial intelligence to entice investors into bogus schemes. We will continue our efforts to protect California consumers and investors by going after these unscrupulous actors.”
The most brazen company to be targeted by the DFPI is Maxpread Technologies, which promised a minimum ROI of 0.6% per day. In fact, the firm appears to operate like a regular Ponzi scheme. It is also believed to be using an AI-generated representation of a fictional CEO, although this has not yet been confirmed.
Up next are Harvest Keeper, Visque Capital, and QuantFund, all offering between 1% and 4.81% guaranteed APRs. The companies in question all named AI as the reason that they could offer this guarantee, as opposed to other firms that promised high-flying possible APRs.
The last of the companies to be targeted by the regulators is Coinbot, which is essentially just another crypto-trading bot – but this time, powered by AI. Coinbot offered investors a minimum 1.5% daily ROI, purportedly earned from trades carried out by the bot. In reality, the company simply paid older investors with funds gathered from newer investors.
The current buzz around AI has gathered much interest from VCs, existing blue-chip corporations, and retail investors alike. Until the hype cools down, we will likely see many more attempts to cash in on the trend, similar to the shitcoin boom of 2017.