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The Texas Securities Board, which includes several state regulators, came together to issue cease and desist orders against Horatiu Charlie Karagachanu and his organizations, The Shark of Wall Street and Hedge4.ai, for promoting two cryptocurrencies called TruthGPT Coin and Elon Musk. AI token. The orders are aimed at curbing what they claim is a securities scam trying to capitalize on the growing buzz around artificial intelligence (AI).
The TruthGPT coin is positioned as a cryptocurrency using an artificial intelligence system called Elon Musk AI. The AI model is claimed to be able to examine multiple digital assets, anticipate the future value of a cryptocurrency, and distinguish profitable investments from fraudulent ones. The parties involved are also promoting TruthGPT Coin as a highly profitable venture, even claiming that its value can increase by a staggering 10,000 times.
The Emergency Cease and Desist Order states that investors are being falsely informed of Elon Musk’s endorsement of the TruthGPT coin, and animated avatars and images of Musk are used to give the impression of his support. Promotional media also show the alleged involvement of other public figures, including Changpeng “CZ” Zhao, founder and CEO of Binance, and Vitalik Buterin, co-founder of Ethereum.
Securities Commissioner Travis J. Isles warned, “Bad actors continue their efforts to capitalize on this broad public interest.” He explained:
“They are developing schemes that make it look like they have developed sophisticated AI platforms, but instead of being based on AI, the proposals are all too often nothing more than a scam.”
Texas Securities Board director Joe Rotunda advised investors to remain vigilant and “put emotions aside and evaluate each offer objectively, especially when it is submitted by an unknown person over the Internet.”
Related: How is artificial intelligence being used to detect fraud?
The scam highlights the ongoing need for caution and due diligence in the cryptocurrency industry. The use of buzzwords such as “artificial intelligence” can be tempting for investors, but as seen in this case, it can also be used by attackers to promote fraudulent activities, including pump and dump schemes that are prevalent in the cryptocurrency industry.
According to data compiled by Chainalysis, “Of the 40,521 tokens issued in 2022 that gained enough traction to be worth analyzing, 9,902, or 24%, showed price declines in the first week, suggesting possible pump and dump activity.” “.