In recent years, the world has witnessed the growth of the cryptocurrency market, which has attracted a lot of buzz. Blockchain technology has transformed the way we view finance in many ways. However, not all digital assets are created equal, and not every token is a good buy.
Recently, U.S. state regulators issued cease and desist orders to alleged AI-crypto tokens, targeting images of high-profile personalities such as Elon Musk, Changpeng Zhao (better known as CZ), and Vitalik Buterin, in an effort to prevent further fraudulent activities and protect consumers.
The supposed AI-crypto tokens claim to use artificial intelligence (AI) to predict and trade cryptocurrencies, but the allegations highlight concerns about the legitimacy of these tokens.
One of the most notable tokens targeted is the “Musk Token,” which was advertised as an AI-powered digital asset that could generate profits by trading bitcoin, ethereum, and other cryptocurrencies. The promotional materials featured a cartoon image of Elon Musk, the CEO of Tesla.
The Texas State Securities Board and the Alabama Securities Commission issued a cease and desist order against Musk Coin, a token that is trademarked in Canada. Both agencies have stated that the token is unregistered, misleading, and fraudulent. They highlighted that the token is labeled as a cryptocurrency that’s powered by AI tech, and that investors have been lured in by the promise of guaranteed returns.
Another targeted token is the “Binance Coin,” which is promoted as an AI-powered, cryptocurrency trading and investment tool using the CZ logo to entice investors. The North Dakota Securities Department issued a cease and desist letter to Crystal Token, the purported issuer of the Binance Coin token. The regulators claimed that the investment opportunity was fraudulent and lacked any real utility.
The Mason Finance Group, a company that sold insurance policies for seniors, is facing charges from the Massachusetts securities regulator for allegedly providing a fraudulent investment opportunity through a tokenized security known as the “Buterin Token.” The securities regulator noted that they discovered the company failed to disclose the risks involved in investing in the token, including the underlying assets.
The tokens involving the celebrities are named after the profiles of their images in an attempt to cash in on the celebrity factor, leading most of them to be seen as scam products, and dubious investment opportunities.
With a lack of federal regulations around cryptocurrencies, state regulators are stepping in to prevent fraudulent cryptocurrency schemes. The Securities Board of Texas stated that the Musk Coin promotion was deceitful, and accused the token issuers of creating a false online presence to spread false news and manipulative information.
Between 2017 and 2018, there were more than $1 billion spent on initial coin offerings (ICOs), many of which were fraudulent, and this trend continues today. To combat this issue, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are actively scrutinizing cryptocurrency tokens.
Despite the rise in popularity of cryptocurrencies, there’s a lot skepticism surrounding their authenticity, and the unpredictable nature of cryptocurrency investments is bound to draw attention from regulators. As such, investors should be cautious about buying into any token that guarantees high returns without providing any indication of their investment expertise.
In today’s market, it’s not just about the technology that the cryptocurrency represents; it’s also about the trustworthiness of the team behind the token. Investors should be wary of ICOs that have no real utility beyond hype and speculation, and they should research the backgrounds of the token issuers. It’s important to remember that reputable companies will provide full disclosure on the risk and potential returns of their ICOs.
It’s vital that investors look beyond the celebrity factor, the promises of AI, and the hype on social media. Cryptocurrencies can hold a lot of promise, but the risk of fraudulent offerings is high. As such, investors should be selective in the tokens they invest in and should seek appropriate financial advice from experts in the field before making any investment decisions.
The Texas State Securities Board, together with regulators from four other U.S. states, have ordered an alleged cryptocurrency “investment scam” to cease all operations. The scheme, which claims to use artificial intelligence (AI) to predict future crypto prices, is operated by Horatiu Caragaceanu, known as “The Shark of Wall Street,” and markets coins called TruthGPT Coin (TRUTH).
According to the Texas State Securities Board, the TRUTH token uses images of well-known figures in the cryptocurrency industry, including Elon Musk, Binance CEO Changpeng Zhao, and Ethereum founder Vitalik Buterin, to promote its offering. The regulator also notes that Caragaceanu has a history of promoting coin offerings that have since dropped to zero value.
In a statement, Texas Securities Commissioner Travis J. Iles said, “Bad actors continue their attempts to capitalize on this widespread public interest,” adding that artificial intelligence is currently a hot topic in the industry.
The regulator alleges that Caragaceanu offered unregistered or non-permitted securities to residents of Texas, where the scheme is operating. Texas is joined in this order by regulators from New Jersey, Alabama, Montana, and Kentucky.
Aside from TRUTH, Hedge4.ai, another venture by Caragaceanu, is also named by the regulators, along with the GPTX token and Hedge 4 non-fungible tokens (NFT). However, the owner of Hedge4.ai’s Telegram channel claims that the initiative is “not a scam investment” and does not sell GPTX to U.S. residents.
Despite the growing interest in AI-powered cryptocurrency trading platforms, regulators are keeping a close eye on the industry to prevent fraudulent activity. This is particularly important, given that the crypto market is still relatively unregulated and vulnerable to scams and fraudulent activities.
The use of celebrity endorsements is increasingly being used as a tactic by scam artists to lure unsuspecting investors. As such, regulators are warning the public to be wary of these endorsements and to do their due diligence before investing.
In conclusion, the action taken by the Texas State Securities Board, along with other regulators in the U.S., highlights the need for vigilance in the cryptocurrency industry. As AI continues to evolve and gain traction in the industry, it is essential to ensure that investment schemes using the technology are legitimate and do not pose a threat to investors.
