05-04-2023 icon

Fake Elon Musk Coin, AI Scam Irks Texas Regulators

By Lucy Adegbe

The Texas State regulators have demanded the termination of an “Artificial intelligence investment scam” that promoted TruthGPT Coin using fake animated avatars and images of Tesla and Twitter CEO Elon Musk to dupe would-be investors. The emergency cease and desist order was filed against Horatiu Charlie Caragaceanu, The Shark of Wall Street, and Hedge4.ai.

Texas regulators say TruthGPT Coin and its creator came to the agency’s attention during routine market surveillance looking into various artificial intelligence offerings.

“We noted its previous and current coin offerings and conducted background research, and subsequently determined that it warranted an investigation to understand its operations better,” Texas State Securities Board Director of Enforcement Joseph Rotunda told Decrypt in an interview. “We found [TruthGPT Coin] by proactively trying to get ahead of the curve and identify the contemporary, trendy type of offerings that may pose a threat to the public.”

The TruthGPT Coin and Elon Musk AI Token were launched in March as a new digital asset investment campaign, Texas regulators said.

“The tokens are being marketed online through avatars portraying Elon Musk endorsing TruthGPT Coin and comparing it to ChatGPT, with the claim that purchasers can earn up to 1,000 times their investment,” the order reads. “TruthGPT Coin is presented as an AI-powered cryptocurrency investment advisor, powered by Elon Musk AI.”

The order called the tokens part of a fraudulent securities scheme.

“In this case, we didn’t allege a Ponzi scheme but rather a fraud through concealment of information and misleading statements,” Rotunda said. “We chose this approach because a thorough source and use analysis of assets in Ponzi cases takes time. We were concerned that waiting, given the hype around AI and the use of Elon Musk’s persona, would do more harm than good.”

Securities Commissioner Travis Iles issued the emergency cease and desist order to “protect the public from immediate and irreparable harm.”