The Texas Securities Board, along with several state regulators, have joined together to issue cease and desist orders 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.
Caragaceanu and his companies allegedly promoted investments into nonfungible tokens and coins tokens through websites and social media. All of the tokens are now worthless, according to the Texas filing.
Joe Rotunda, director of the enforcement division at the Texas State Securities Board pointed out in an interview that the tokens are the latest reiteration of evildoers trying to leverage popular buzzwords and personalities to make money from unsuspecting investors.
The orders intend to crack down on what they claim is a fraudulent securities scheme attempting to capitalize on the growing hype around artificial intelligence (AI).
Elon Musk AI’s TruthGPT Coin
TruthGPT Coin is marketed as a cryptocurrency that uses an AI system called Elon Musk AI. The AI model can supposedly 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 as much as 10,000 times.
The website for the TruthGPT coin also contained imagery of the likes of Ethereum Co-founder Vitalik Buterin and Changpeng “CZ” Zhao, chief executive officer of Binance, implying they are involved, the filing said. Montana, Alabama, Kentucky, and New Jersey are also filing orders against the defendants, Rotunda said.
The emergency cease and desist order claims that investors are being falsely informed by Elon Musk’s endorsement of TruthGPT Coin, and animated avatars and images of Musk are being used to give the impression of his support. 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 profit from this broad public interest.” He explained:
“They are devising schemes that create the appearance that they have developed sophisticated artificial intelligence platforms – but instead of being rooted in artificial intelligence, the offerings are too often nothing more than frauds.”
Texas State Securities Board Director of Enforcement Joe Rotunda advised investors to remain 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 industry. The use of buzzwords such as “artificial intelligence” may 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 is very common within the cryptocurrency industry.
According to data collected by Chainalysis, “from 40,521 tokens launched in 2022 that gained enough relevance to be worthy of analysis, 9,902, or 24%, saw a price drop in the first week indicative of possible pump and dump activity.”
According to the cease and desist order, investors are being given the impression that Elon Musk backs “TruthGPT Coin.”
By Marina Meza
