California watchdog hunts crypto businesses for creating fake AI CEOs
A financial regulator in California has accused several companies providing AI-based crypto trading services of fraudulent investment schemes.
On April 19, the California Department of Financial Protection and Innovation issued cease and desist orders against five organizations that purported to employ artificial intelligence to trade crypto assets. These firms include Harvest Keeper, Visque Capital, Coinbot, QuantFund, Maxpread Technologies, and its CEO Jan Gregory Cerato. The California Department of Financial Protection and Innovation issued these orders.
The Digital Forensics and Investigations Group (DFPI) observed that the companies “went to great lengths to appear as if they were legitimate businesses,” meaning they constructed professional websites, social media profiles, and promotions from influencers.
Harvest Keeper and Coinbot are suspected of utilizing actors and AI to mimic CEOs, violating the California Financial Code. Both Harvest Keeper and Coinbot’s websites have been taken down. However, the websites of the other three companies are still accessible online.
According to the regulating agency, two companies even fabricated their chief executive officers. An artificial intelligence-generated avatar known as “Michael Vanes” is believed to have been utilized by the alleged technology company Maxpread to function as CEO and promote its goods. The alleged avatar appeared in YouTube advertisements promoting the company’s wares.
It was alleged that the company Harvest Keeper, which presents itself as a cryptocurrency trading business, retained the services of an actor to portray the part of its chief executive officer, Markus Peters. According to the DFPI, Harvest referred to Peters as the “leader” and the “main generator of ideas.”
The DFPI asserts that the entities were capitalizing on the excitement surrounding artificial intelligence (AI) to entice potential investors with the promise of “incredible returns.” They did this by claiming to use the technology to trade crypto assets and, amongst other allegations, by employing multi-level marketing schemes to reward investors for recruiting other potential investors.
The regulatory body is tightening restrictions on high-yield investment products, claiming that these programs inflate expectations by promising high returns before failing to deliver on those promises.