It appears that bad actors used prominent figures like Changpeng Zhao and Elon Musk to promote their fraudulent cryptocurrencies.
Texas State Securities Board, an authority tasked with protecting Texas investors, and other state authorities issue cease-and-desist orders against the promoters of fraudulent cryptocurrencies dubbed "Elon Musk AI Token" and "TruthGPT Coin."
Horatiu Charlie Caragaceanu and his companies, The Shark of Wall Street and Hedge4.ai, have been promoting the above-mentioned cryptocurrencies as part of a securities scheme attempting to ride the wave of artificial intelligence (AI) excitement.
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TruthGPT Coin is promoted as crypto powered by an AI system called Elon Musk AI, which supposedly analyzes various digital assets to predict future cryptocurrency values and differentiate profitable investments from scams.
The promoters have touted TruthGPT Coin as a highly profitable investment, even claiming it could increase by 10,000 times.
However, the Emergency Cease and Desist Order reveals that investors have been misled by false claims of Elon Musk's endorsement of TruthGPT Coin. The scheme's promotional materials use animated avatars and images of Musk, Binance CEO Changpeng Zhao, and Ethereum co-founder Vitalik Buterin to create the illusion of their support.
Securities Commissioner Travis Iles warned that bad actors have been exploiting the public's interest in AI to perpetrate scams.
They're devising schemes that create the appearance that they have developed sophisticated artificial intelligence platforms—but instead of being rooted in artificial intelligence, the offerings too often are nothing more than frauds.
Joe Rotunda, Texas State Securities Board Enforcement Director, urged investors to exercise caution and evaluate offerings objectively, especially when pitched by unknown individuals online.
As scammers continue to use the public's fascination with AI and cryptocurrencies, investors must stay vigilant and discerning when evaluating investment opportunities.
Texas has been one of the most active states to pass various crypto-related regulations. At the end of April, the Texas House of Representatives passed a bill mandating crypto exchanges to hold adequate reserves to cover all customer-related commitments.
