A California regulator accuses cryptocurrency companies of using actors and AI to pose as CEOs and entices investors with high-yield investment schemes.
- Five organizations that assert to employ AI to trade cryptocurrencies have been handed cease-and-desist orders by the California Department of Financial Protection and Innovation.
- The regulator claims that the organizations are fraudulent investment schemes that deceive investors by promising large profits.
Recent Development
Five organizations are being investigated by the California Department of Financial Protection and Innovation (DFPI) for running fraudulent investment schemes. All the organizations, including Harvest Keeper, Visque Capital, Coinbot, QuantFund, and Maxpread Technologies, claimed to employ artificial intelligence (AI) to trade cryptocurrency assets. However, they have been accused of making outsized returns on investment claims.
The DFPI has also charged Maxpread and Harvest Keeper with forging their CEOs. Maxpread is believed to have promoted its products using an AI-generated avatar dubbed “Michael Vanes,” while Harvest Keeper allegedly hired an actor to represent its CEO, Markus Peters.
The organizations allegedly used multi-level marketing strategies, creating expert websites, social media accounts, and influencer campaigns to compensate investors for bringing in new members. A claim of knowledge, competence, expertise, and AI trading, according to the DFPI, is fraudulent.
DFPI’s Warning
The websites went offline, and withdrawals were never executed. Thus investors lost access to their money. Initially, investors were granted early withdrawals and saw their account balances rise. With a $50,000 initial commitment, Visque Capital, which still maintains a website, offers investment options that promise daily returns of up to 3%. The DFPI has cautioned investors to be wary of schemes that generate excitement by promising large profits before going out of business.
AI Impersonation in Fraud
A very recent and concerning innovation in fraud schemes is Maxpread’s use of an AI-generated avatar to impersonate a CEO. In recent years, as AI technology has improved, there has been concern over using AI to imitate someone. It’s not challenging to picture criminals employing this technology to make false identities and con people out of their money. Authorities, tech businesses, and the general public must be aware of the potential threats posed by AI-based deep fake technology since it may produce convincing recordings of people saying and acting in ways they never would.
Investors Beware
Investors should be skeptical of schemes that promise absurdly high returns, particularly in the uncontrolled cryptocurrency industry. Scams involving cryptocurrencies have existed for a while, and as the market expands and receives more attention from the general public, they will probably get more complex. The DFPI’s action serves as a reminder to investors that they should do their homework before investing in any prospects and be wary of promises that seem too good to be true. These strategies should not dupe investors because it is simple and easy to establish a good website and social media presence.
Conclusion
As a result of the DFPI’s investigation into allegedly fraudulent investment schemes combining cryptocurrencies and AI, investors need to proceed with caution while making purchases in the cryptocurrency market. A concerning new development in fraudulent schemes is the employment of AI-generated avatars to impersonate CEOs. Cryptocurrency frauds are on the rise. Before making any investments, investors should do extensive research and be wary of any investment possibilities that offer significant returns. Keep in mind that the cryptocurrency industry is mainly unregulated, and investors should use due caution to safeguard their investments.
