Crypto scammers are using AI to create fake CEOs to land big bucks

Artificial Intelligence (AI) is hot right now and crypto scams haven't slowed a bit. Increasingly scammers are mashing the two together to create Deepfakes of celebrities like Elon Musk to swindle people out of money, and in some cases they’ve gone one step further and created wholly fake AI generated CEOs that try and dupe people.

This week, the California Department of Financial Protection and Innovation (DFPI) announced its latest efforts to protect residents from crypto scams, sending cease and desist letters to five companies it claims attempted to profit from the AI hype train.

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

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In addition to trying to scam investors out of money, Maxpread Technologies is alleged to have “attempted to trick investors about the identity of the CEO using a fake, AI-generated avatar programmed to recite a script.”

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

Fake. But now rich.

Another company, Harvest Keeper, allegedly hired an actor to play its CEO - no AI-generated leaders in sight in that case, although the firm did claim to use AI to maximize crypto trading returns.

“Scammers are taking advantage of the recent buzz around artificial intelligence to entice 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.”

Labelling them Ponzi schemes, the California regulator said that investors were told that if they invested funds, the companies would use their knowledge, skill, experience, and AI assistance 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 crypto crime in the state. Following the collapse of FTX, the DFPI joined other state regulators in opening an investigation into the cryptocurrency exchange and its founder, Sam Bankman-Fried. In December, the DFPI ordered MyConstant to cease offering select crypto products, as the DFPI prohibited the sale of securities, including its primary lending platform and interest-bearing accounts.

“The entities named have been ordered to stop operating in California because they have violated securities law,” a DFPI spokesperson told reporters. “This means no 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 to requests for comment.