Crypto scammers are taking advantage of the latest technological developments in artificial intelligence (AI) to fool investors.
California regulators said on Thursday that scammers used AI to generate fake CEOs to deceive potential investors.
The California Department of Financial Protection and Innovation (DFPI) also announced its latest crackdown to protect residents from crypto scams, sending cease and desist letters to five firms claiming to make a profit from the current AI hype, according to reports by Decrypt.
The DFPI targeted Maxpread Technologies, Harvest Keeper, Coinbot, QuantFund, and Visque Capital which it accused of making false promises relating to profitability and offering unqualified securities.
The agency purports the companies made exaggerated claims about increasing their returns using AI for crypto trading and multi-level marketing schemes to attract unsuspecting victims. The DFPI said on Twitter:
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
Maxpread Technologies Allegedly Used AI to Generate a Fake CEO
Both Maxpread Technologies and Harvest Keeper have been accused of misrepresenting their CEOs. Maxpread allegedly created a computer-generated avatar named “Gary” to represent their CEO, and Harvest Keeper allegedly used an actor to represent their CEO.
The DFPI suggests Maxpread Technologies promoted its “profitability” using a promotional YouTube video featuring an avatar built on Synthesia.io, which was programmed to read a screenplay.
Synthesia.io’s AI technology utilizes deep learning algorithms to create life-like animations and speech, enabling users to generate high-quality content. A YouTube video was published on April 8 featuring CEO “Michael Vanes.”
The DFPI, however, indicates that such a person does not exist, and Maxpread’s previous chief marketing officer and corporate brand manager, Jan Gregory, is the company’s actual CEO.
Forbes reports Elizabeth Smith, a representative from DFPI, explained in an email that the agency had traced the avatar to Synthesio.io, where it had been named “Gary.”
Harvest Keeper Employed an Actor to Perform as CEO
Harvest Keeper took a slightly different approach. The agency alleges that it employed a human actor to perform the role of the company’s CEO. The company also claimed to use AI to boost its trading profitability, but instead, it appears to rely on humans.
Neither organization has responded to the accusations.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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