California regulators have taken action against alleged crypto scams leveraging the artificial intelligence (AI) hype, including one company that purportedly created a fake AI-generated CEO for a YouTube video.
The California Department of Financial Protection and Innovation (DFPI) has announced its most recent initiative to safeguard residents from crypto scams. The agency has issued cease and desist letters to five companies it alleges were exploiting the AI trend for profit. These companies are Maxpread Technologies, Harvest Keeper, Visque Capital, Coinbot, and QuantFund.
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
The DFPI has accused these companies of offering unqualified securities and making false promises to investors. It claims the businesses exaggerated their ability to produce high returns through AI-assisted crypto trading and utilized multi-level marketing techniques to attract victims.
Maxpread Technologies, in particular, is alleged to have created a fake AI-generated avatar to pose as its CEO in an effort to deceive investors. The company uploaded a YouTube video featuring a supposed CEO named “Michael Vanes” discussing its launch. The DFPI, however, asserts that the real CEO is Jan Gregory, who has been presented as the company’s chief marketing officer and corporate brand manager.
Another firm, Harvest Keeper, is accused of hiring an actor to portray its CEO, though the company claimed to use AI to optimize crypto trading returns.
DFPI Commissioner Clothilde Hewlett stated that scammers are exploiting the excitement around artificial intelligence to lure investors into fraudulent schemes. The agency is committed to protecting California consumers and investors by targeting these malicious actors.
The regulator described these operations as Ponzi schemes, with investors being promised that their funds would be used to generate substantial profits through the companies’ expertise and AI-assisted crypto trading.
The DFPI reported that these claims were false, with the companies promising daily returns on investments ranging from 0.6% to 4.81%. These cease and desist letters are part of the California regulators’ ongoing efforts to combat crypto crime in the state.
A DFPI spokesperson informed Decrypt that the named entities have been ordered to cease operations in California due to securities law violations. This prohibition extends to selling or even offering such “investments” to California residents.
Maxpread Technologies’ website claims that the company and its affiliates do not target customers or operate in the United States. Maxpread, Harvest Keeper, Visque Capital, Coinbot, and QuantFund have not yet responded to Decrypt’s requests for comment.