Five companies claiming to offer AI-assisted crypto trading services have been accused of running fraudulent investment schemes by the California Department of Financial Protection and Innovation.
Two of the firms were accused of faking their CEOs, with one allegedly using an AI-generated avatar to act as its CEO.
The entities used the hype surrounding AI to lure investors with the promise of “incredible returns” by claiming to use the technology to trade crypto assets and use multi-level marketing schemes to reward investors for recruiting others.
The DFPI noted that the entities went to great lengths to appear as if they were legitimate businesses by creating professional websites, social media accounts, and promotions from influencers.
The investment plans on Visque Capital’s website promised returns of up to 3% per day, which would supposedly give investors a return of around $270,000 after the full 180 days, based on an initial investment of $50,000. The DFPI alleges that the schemes would initially seem to work well, with early withdrawals processed and account balances steadily increasing.
However, eventually, withdrawals would not be processed, and the website would go offline, leaving investors with no way to access their funds.
Cointelegraph contacted the five companies for comment, but only received a response from two of them.
This latest incident highlights the risk that investors face from fraudulent investment schemes, particularly those that claim to use cutting-edge technology like AI to generate outsized returns.
The use of AI in finance and investment is still in its early stages, and investors need to be vigilant when investing in companies that claim to use AI for trading.
Regulators and law enforcement agencies need to be proactive in investigating and shutting down fraudulent investment schemes to protect investors and maintain the integrity of financial markets.
