YieldTrust.ai in hot soup as watchdogs double down on AI DApps
YieldTrust.ai, a crypto trading platform, has been hit with combined enforcement proceedings from Montana, Texas, and Alabama securities authorities on allegations that it is perpetrating a Ponzi scheme.
Authorities in Montana, Texas, and Alabama released statements on April 4 quoting YieldTrust.ai and its Romanian owner, Stefan Ciopraga, as saying that their DApp, YieldBot, is “powered by cutting-edge ai systems” and “capable of accomplishing 70 times more trades with 25 times increased profits than any human trader could.”
The authorities stated YieldBot’s smart contract was “hazardous” because “the deploying team maintained sufficient power to stop consumers from withdrawing their funds.” This was the conclusion of an independent business that had audited YieldBot.
The hoax, according to allegations, claimed it could make 2.2% daily returns by using AI to trade more often and more profitably than a human.
YieldTrust was accused by authorities of misleading investors by not providing “any evidence” that the AI-powered bot even exists, much less that it is functioning at the level YieldTrust.ai promises.
The Texas State Securities Commission filed numerous stop-and-desist orders. At the same time, the Montana regulator issued an order demanding YieldTrust.ai halt and cease all operations in Montana and seeking a total of $100,000 in damages.
Scammers are allegedly capitalizing on the AI hype “by devising high-tech ploys to fool investors,” as observed by the regulator’s pronouncements and emphasized in a tweet by Montana’s securities commissioner, Troy Downing, on April 4.
The regulator’s directives accused YieldTrust.ai of “raising funds from the public to pay withdrawals from past investors,” which, together with the promise of significant returns, indicates a Ponzi scheme.
The Twitter account for YieldTrust.ai has also been deactivated, and the website has been taken down.
After the introduction of the ChatGPT AI chatbot on November 30 by AI research firm OpenAI, AI has become much more visible, accessible, and surrounded by excitement.
ChatGPT has shown to be an effective tool, despite its occasional inaccuracy; the most recent version can clear the bar, score perfectly on SATs, and find vulnerabilities in smart contracts.