Authorities in Texas have issued an emergency cease and desist order against an artificial intelligence (AI) crypto scam allegedly endorsed by Elon Musk, Changpeng Zhao, and Vitalik Buterin.
Since last month, various rug pulls and crypto scams have come to light. Bad actors are utilizing the hype of artificial intelligence (AI) to defraud investors out of their money.
TruthGPT – The AI Crypto Scam
The Texas States Securities Board (Texas SSB) has launched a probe into AI crypto scam TruthGPT Coin.
According to a Texas SSB press release, the developers of the TruthGPT coin, Horatiu Charlie Caragaceanu, The Shark of Wall Street, and Hedge4.ai, claimed the coin would give a capital appreciation of 10,000 times.
The team claimed that their AI model, Elon Musk AI, can analyze cryptocurrencies and predict future prices. Ironically, the team declared that the AI model could also identify scam investment projects.
Furthermore, the Texas SSB says that the project falsely created an appearance that popular personalities such as Elon Musk, Changpeng Zhao, and Vitalik Buterin are part of the ecosystem.
Elon Musk is planning to launch an AI startup, TruthGPT, to compete with OpenAI’s ChatGPT.
Regulators have issued an emergency cease and desist order against the TruthGPT coin project, which is just riding the hype of Musk’s TruthGPT.
Due to cease and desist orders, the project will have to immediately stop engaging in certain activities that are considered illegal.
A Breeding Ground for Scams
Securities Commissioner Travis Iles said:
Artificial intelligence is buzzing. It’s received extensive coverage by traditional media, is trending in social media and has the potential to impact many different industries. Bad actors continue their attempts to capitalize on this widespread public interest.
They’re devising schemes that create the appearance they have developed sophisticated artificial intelligence platforms – but instead of being rooted in artificial intelligence, the offerings too often are nothing more than frauds.
Last month, BeInCrypto reported that a single wallet was behind 114 meme coins involved in rug pulls. Some meme coins rode the AI hype and were named Bad AI Doge, ScaryAI, and TechGPTETH.
As new technology comes to the fore, it needs regulation. Hence, with the rise of AI, global regulators are looking at the technology with a view to regulating it.
Late last month, the European Union proposed a bill to regulate generative AI tools like ChatGPT and Midjourney.
Now, the Financial Times reported that the U.K. competition watchdog is closely reviewing the AI market and the development of models behind popular tools such as ChatGPT.
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