Crypto Scammers Used AI to Create Fake CEO, Regulators Say

Crypto scammers have reportedly used artificial intelligence (AI) to create a fake CEO in order to deceive investors. This sophisticated tactic was revealed by regulators who investigated a blockchain company accused of fraud. The scammers used AI to generate a lifelike image and voice for the fake CEO, who was then presented to investors as the real deal. This latest development demonstrates how scammers are increasingly using technology to perpetuate their fraudulent schemes. As cryptocurrency continues to gain popularity and adoption, it is crucial for investors to remain vigilant and wary of potential scams.

Artificial Intelligence and Crypto Scams: The Latest Target of California Regulator

Cryptocurrency scams are a dime a dozen, and it seems they will stop at nothing to dupe unsuspecting investors—including leveraging the hype around artificial intelligence (AI). 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 claims attempted to profit from the AI hype train.

The targeted companies include Maxpread Technologies, Harvest Keeper, Visque Capital, Coinbot, and QuantFund. The DFPI accused each of them of offering unqualified securities and making false promises to investors. Moreover, these companies were accused of making exaggerated claims about generating high returns using AI for crypto trading, and using multi-level marketing tactics to lure victims.

Maxpread Technologies, in particular, went as far as creating a fake, AI-generated avatar programmed to recite a script, in an attempt to trick investors about the identity of the CEO. The company claimed that a certain “Michael Vanes” was its CEO when the real one was Jan Gregory, the chief marketing officer and corporate brand manager.

Harvest Keeper, on the other hand, allegedly hired an actor to play its CEO, making false claims about using AI to maximize trading returns. The regulator labelled them as Ponzi schemes, pointing out that investors were promised high returns based on the company’s knowledge, skill, experience, and AI assistance, which were all false claims.

In its statement, the DFPI Commissioner Clothilde Hewlett said, “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 cease and desist letters are part of California regulators’ actions to stamp out crypto crime in the state. The DFPI previously joined other state regulators in investigating the cryptocurrency exchange FTX and its founder, Sam Bankman-Fried. It also ordered MyConstant to cease offering select crypto products in December 2020, as it violated securities laws.

Although targeted by the California agency, Maxpread Technologies claimed that it and its affiliates do not target customers or operate in the United States. None of the targeted companies—Maxpread, Harvest Keeper, Visque Capital, Coinbot, and QuantFund—responded immediately to media requests for comment.

In summary, it is vital to exercise caution and conduct thorough research before investing in any crypto product or company, especially those that make lofty claims about AI and high returns. The latest action by the California regulator is a reminder that the crypto industry needs regulatory oversight to protect investors from fraudulent schemes. Stay informed to stay protected.

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