Crypto scammers are taking advantage of the latest technological developments in artificial intelligence (AI) to deceive investors.
California regulators said Thursday that scammers are using AI to generate fake CEOs to trick 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 companies claiming to profit from the current hype. on AI, according to reports from Decrypt.
The DFPI targeted Maxpread Technologies, Harvest Keeper, Coinbot, QuantFund and Visque Capital which it accused of making false promises of profitability and offering unqualified securities.
The agency claims companies have made exaggerated claims about boosting their returns by using AI for crypto trading and multi-level marketing schemes to lure unsuspecting victims. The DFPI said on Twitter:
Scammers like to trick investors using fake CEOs, fake algorithms, and Ponzi schemes. Today, we issued cease and desist orders to five entities/individuals who violated CA securities laws. For more information: https://t.co/gj13z2OE4G#invest #hyip #Cryptonews pic.twitter.com/MXHPYwVIny
— California State Department of Financial Protection and Innovation (@CaliforniaDFPI) April 19, 2023
Maxpread Technologies allegedly used AI to generate a fake CEO
Maxpread Technologies and Harvest Keeper have been accused of misrepresenting their CEOs. Maxpread would have created a computer-generated avatar named "Gary" to represent their CEO, and Harvest Keeper would have used an actor to represent their CEO.
The DFPI suggests that Maxpread Technologies promoted its "profitability" using a promotional YouTube video featuring an avatar built on Synthesia.io, which was programmed to read a script.
Synthesia.io's AI technology uses deep learning algorithms to create realistic animations and speech, allowing users to generate high-quality content. A YouTube video was posted on April 8 featuring CEO "Michael Vanes".
The DFPI, however, says no such person exists, and Maxpread's former chief marketing officer and corporate brand manager, Jan Gregory, is the company's true CEO.
Forbes reports that Elizabeth Smith, a representative of the DFPI, explained in an email that the agency traced the avatar to Synthesio.io, where it was named "Gary".
Harvest Keeper has hired an actor to play the role of CEO
Harvest Keeper has taken a slightly different approach. The agency claims to have employed a human actor to play the role of the company's CEO. The company has also claimed to use AI to increase its business profitability, but instead it appears to rely on humans.
Neither organization responded to the accusations.
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