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State authorities take action against deceptive cryptocurrencies marketed as ‘Elon Musk AI Tokens’ and ‘TruthGPT Coin’
The Texas State Securities Board, along with various state regulators, has united to issue cease-and-desist orders against Horatiu Charlie Caragaceanu and his entities, The Shark of Wall Street and Hedge4.ai, for endorsing two cryptocurrencies known as TruthGPT Coin and Elon Musk AI Token. The orders aim to address what they describe as a deceptive securities scheme attempting to exploit the increasing interest in artificial intelligence (AI).
TruthGPT Coin is being promoted as a cryptocurrency that employs an AI system referred to as Elon Musk AI. This AI model is claimed to be capable of analyzing numerous digital assets, predicting future cryptocurrency prices, and differentiating profitable investments from fraudulent ones. The promoters are also advertising TruthGPT Coin as a potentially lucrative opportunity, even suggesting it could appreciate in value by an astonishing 10,000 times.
The Emergency Cease and Desist Order indicates that investors are being misled regarding Elon Musk’s endorsement of TruthGPT Coin, with animated avatars and images of Musk being used to create the illusion of his backing. Promotional materials also depict the supposed involvement of other notable figures, such as Changpeng “CZ” Zhao, the founder and CEO of Binance, and Vitalik Buterin, the co-founder of Ethereum.
Securities Commissioner Travis J. Iles warned, “Malicious actors persist in their efforts to take advantage of this widespread public interest.” He elaborated:
“They’re crafting schemes that create the facade that they have developed advanced artificial intelligence platforms – but rather than being based in artificial intelligence, the offerings are frequently nothing more than scams.”
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Joe Rotunda, enforcement director of the Texas State Securities Board, urged investors to remain alert and “to set aside emotion and objectively assess every offering – particularly when presented by an unfamiliar individual online.”
Related: How is artificial intelligence used in fraud detection?
This fraudulent scheme underscores the ongoing necessity for caution and thorough investigation in the cryptocurrency sector. The use of terms like “artificial intelligence” can be appealing to investors, but as demonstrated in this instance, it can also be exploited by unscrupulous individuals to facilitate fraudulent practices, including pump-and-dump schemes, which are prevalent in the crypto market.
Data collected by Chainalysis reveals that “of the 40,521 tokens launched in 2022 that gained sufficient traction to be worth analyzing, 9,902, or 24%, experienced a price drop in the first week indicative of potential pump and dump activity.”
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