Crypto fraudsters used AI to create fake CEO, regulators say

Artificial intelligence is hot right now, and crypto scams haven’t slowed down. And reportedly, some scammers are mixing them up to trick and defraud potential investors, including creating a fake AI-generated CEO to try to trick people.

This week, the California Department of Financial Protection and Innovation (DFPI) announced its latest effort to protect citizens from crypto scams, sending cease and desist letters to five companies it claims were trying to cash in on the AI ​​hype train.

The agency’s latest targets are Maxpread Technologies, Harvest Keeper, Visque Capital, Coinbot and QuantFund – which the DFPI accused of each offering unqualified securities and making false promises to investors. The DFPI accused the companies of making exaggerated claims to generate high returns using AI for crypto trading and layered marketing tactics to lure in unsuspecting victims.

In addition to trying to swindle investors out of money, Maxpread Technologies allegedly “attempted to deceive investors about the identity of the CEO by using a fake, AI-generated avatar programmed to recite a script.”

In a YouTube video posted on the official Maxpread account on April 8, an alleged CEO named “Michael Vanes” gives an address about the company’s launch. But the agency claims it’s not a real person; Maxpread’s real CEO is actually Jan Gregory, whom the company had named its chief marketing officer and corporate brand manager.

A screenshot showing Maxpread’s alleged fake, AI-generated CEO. Photo: California DFPI

Another company, Harvest Keeper, reportedly hired an actor to play its CEO — no AI-generated executives in sight in that case, even though the firm claimed to use AI to maximize returns on crypto trading.

“Fraudsters are taking advantage of the recent buzz around artificial intelligence to lure investors into bogus schemes,” DFPI Commissioner Clothilde Hewlett said in a statement. “We will continue our efforts to protect California consumers and investors by going after these unscrupulous actors.”

The California regulator labeled them Ponzi schemes, saying investors were told that if they invested funds, the companies would use their knowledge, skills, experience and AI help to trade crypto assets and generate incredible profits for investors.

“In each case, these claims are false,” the DFPI wrote, saying the companies promised between 0.6% and 4.81% daily returns on investments.

The cease and desist letters are the latest in California regulators’ actions to stamp out cryptocrime in the state. Following the collapse of FTX, the DFPI joined other government regulators in opening an investigation into the cryptocurrency exchange and its founder, Sam Bankman-Fried. In December, DFPI ordered MyConstant to stop offering selected crypto products, as DFPI banned the sale of securities, including its primary lending platform and interest-bearing accounts.

“The named entities have been ordered to cease operations in California for violating securities laws,” a DFPI spokesperson said Decrypt. “This does not mean selling or even offering ‘investments’ like these to California residents.”

Although it was targeted by the California agency, the Maxpread Technologies website claims that it and its affiliates do not target customers or operate in the United States. Maxpread, Harvest Keeper, Visque Capital, Coinbot and QuantFund did not immediately respond Decrypttheir requests for comment.