Regulators Take Action Against AI-Powered Crypto Ponzi Scheme YieldTrust.ai
- According to Montana's securities regulator, YieldBot had been developed for Binance's BNB Smart Chain and could connect with staking programs to produce returns of up to 2.2% per day
- The regulators have ordered YieldTrust.ai to cease all activities within the state and pay $100,000 in total fines
Cryptocurrency trading platform YieldTrust.ai is under fire from regulators in Montana, Texas, and Alabama who have filed enforcement actions against the company, alleging it is perpetrating a Ponzi scheme.
YieldTrust.ai and its owner Stefan Ciopraga claimed their DApp, YieldBot, powered by advanced AI, could outperform human traders by executing 70x more trades and generating 25x higher profits. But regulators allege YieldTrust.ai failed to substantiate the bot's existence or capabilities as claimed.
According to Montana's securities regulator, YieldBot had been developed for Binance's BNB Smart Chain and could connect with staking programs to produce returns of up to 2.2% per day for new investors. The regulator further stated that YieldBot could analyze the cryptocurrency markets and make independent trading decisions within milliseconds. But an audit conducted by an independent firm on YieldBot's smart contract revealed that it was "unsafe." The audit found that the team that deployed the smart contract had retained enough control to prevent users from withdrawing their assets.
Scammers are capitalizing on the buzz surrounding AI and developing sophisticated schemes to deceive investors, according to Montana's securities commissioner, Troy Downing. YieldTrust.ai allegedly raised capital from the public to cover withdrawals from previous investors, which, along with the promise of high returns, are the hallmarks of a Ponzi scheme.
The regulators have ordered YieldTrust.ai to cease all activities within the state and pay $100,000 in total fines. The Texas State Securities Board has also issued several cease and desist orders against the company. YieldTrust.ai has since shut down its website, and its Twitter account has been deleted.
This news comes as OpenAI's AI research company released the ChatGPT AI chatbot, which has gained more prominence, accessibility, and hype. Despite occasional inaccuracies, ChatGPT has proven to be a powerful tool, with the latest version capable of meeting standards, acing the SATs, and even identifying vulnerabilities in smart contracts.
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