The crypto world is still a breeding ground for scams, and some fraudsters are using AI technology to trick unsuspecting investors. The California Department of Financial Protection and Innovation (DFPI) has taken action against five companies, accusing them of using exaggerated claims and unqualified securities to attract investors. The DFPI identified Maxpread Technologies, Harvest Keeper, Visque Capital, Coinbot, and QuantFund as the culprits, alleging that they used AI hype to create the illusion of high returns in crypto trading.
Maxpread Technologies went as far as creating a fake CEO using an AI-generated avatar programmed to read a script. The avatar, named Michael Vanes, gave a speech about the company's launch in a video posted on Maxpread's official YouTube channel. The DFPI claims that the avatar did not represent a real person and that Jan Gregory, the actual CEO, was referred to as the company's chief marketing officer and corporate brand manager. Harvest Keeper, on the other hand, allegedly hired an actor to play its CEO, although the company claimed to use AI to maximize crypto trading returns.
The DFPI warned that these companies used multi-level marketing tactics to lure unsuspecting victims and labeled their actions as Ponzi schemes. The regulator accused them of making false promises to investors and offering unqualified securities. Clothilde Hewlett, the DFPI commissioner, stated that the agency would continue to protect California consumers and investors from such unscrupulous actors.
The cease and desist letters sent by the DFPI are part of a broader effort by California regulators to combat crypto-related crime in the state. After the collapse of FTX, the DFPI joined other state regulators in launching an investigation into the cryptocurrency exchange and its founder, Sam Bankman-Fried. Last December, the DFPI ordered MyConstant to stop offering certain crypto products, as the agency prohibited the sale of securities, including the platform's primary lending service and interest-bearing accounts.