According to the cease and desist order, investors are being given the impression that Elon Musk endorses “TruthGPT Coin”.
The Texas Securities Board, along with several state regulators, have come together to issue orders cease and desist order against Horatiu Charlie Caragaceanu 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 seek to clamp down on what they claim is a fraudulent securities scheme trying to capitalize on the growing hype around artificial intelligence (AI).
TruthGPT Coin is traded as a cryptocurrency that uses an AI system called Elon Musk AI. The AI model can purportedly examine multiple digital assets, anticipate future cryptocurrency values, and distinguish lucrative investments from fraudulent ones. The parties involved are also promoting TruthGPT Coin as a highly profitable venture, even claiming that it could increase in value by up to 10,000 times.
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The emergency cease and desist order claims that investors are being falsely informed of Elon Musk’s endorsement of TruthGPT Coin, using animated avatars and images of Musk to give the impression of their support. The promotional media also shows the alleged involvement of other public figures, such as Changpeng “CZ” Zhao, founder and CEO of Binance, and Vitalik Buterin, co-founder of Ethereum.
Securities Commissioner Travis J. Iles warned: “Bad actors continue their attempts to capitalize on this broad public interest.” He explained:
“They are devising schemes that create the appearance that they have developed sophisticated AI platforms – but instead of being rooted in AI, the offers are too often nothing more than fraud.”
The chief controlling officer of the Texas State Securities Board, Joe Rotunda, advised investors to stay vigilant and “put emotion aside and objectively evaluate each offer, especially when presented by an unknown person over the Internet.”
The fraudulent scheme highlights the ongoing need for caution and due diligence in the cryptocurrency sector. The use of buzzwords like “artificial intelligence” can be attractive to investors, but as seen in this case, it can also be used by bad actors to promote fraudulent activities, including pump-and-dump schemes, which It is very common within the cryptocurrency industry.
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According to data Picked up by Chainalysis, “of the 40,521 tokens launched in 2022 that gained enough prominence to be worthy of analysis, 9,902, or 24%, saw a price drop in the first week indicative of potential pump and dump activity.”
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