5-11-2023 3:19pm

NJ Bureau of Securities Cracks Down on AI-Powered Investment Scheme Allegedly Backed by Elon Musk

State Agencies Coordinate to Halt Operations of TruthGPT Coin, Accused of Misrepresenting Celebrity Endorsements.

NEW JERSEY — The New Jersey Bureau of Securities, under the Division of Consumer Affairs, has issued a Cease and Desist Order to halt an investment operation reportedly powered by artificial intelligence (AI) and falsely endorsed by entrepreneur Elon Musk. The operation, involving the cryptocurrency TruthGPT Coin, was run by Horatiu Charlie Caragaceanu and his organizations, The Shark of Wall Street and Hedge4.ai.

Caragaceanu's firms, marketed as "AI labs" using machine learning programmers and ethical hackers, were promoting the TruthGPT Coin. The coin allegedly employed an AI model named Elon Musk AI, claimed to predict future digital asset prices, differentiate between profitable investments and scams, and touted a potential 1,000-fold increase in value.

The Cease and Desist Order alleges that the Respondents misrepresented Musk's endorsement of TruthGPT Coin, manipulating animated avatars and images of him to falsely show his support. The order further alleges that the scheme deceptively suggested involvement from other high-profile figures in the crypto industry such as Changpeng "CZ" Zhao, founder and CEO of Binance, Vitalik Buterin, founder of Ethereum, and Bitcoin creator, Satoshi Nakamoto.

Attorney General Matthew J. Platkin warns, “These bad actors are making it seem like using artificial intelligence is a sure-fire get-rich-quick scheme, but they underplay the risks associated with investing and can potentially harm investors and their life savings.”

According to the order, the Respondents have previously launched several initial coin offerings (ICOs) on the Ethereum blockchain and Binance Smart Chain. Despite their promises of sky-high returns, the tokens never significantly increased in price and have a current fair market value of $0.

Cari Fais, Acting Director of the Division of Consumer Affairs, said, “Scammers are recruiting investors with advertisements on social media that contain flashy graphics, use technical terminology, and promise significant profits coupled with little or no risk. But as we tell investors, if something seems too good to be true, it most likely is.”

The Bureau, tasked with protecting investors and regulating the securities industry in New Jersey, emphasized that TruthGPT Coin and other investments named in the order are not registered for sale in New Jersey, and the entities involved are not registered as dealers or agents.

Acting Bureau Chief Amy G. Kopleton urged investors to approach new investment products with caution, saying, “Raising public awareness of crypto-related fraud and the risks associated with unregistered securities is a critical part of the Bureau’s mission. An informed investor is the best protection against financial predators.”

The Bureau's investigation, led by Investigator Richard Pearsall, underscores the agency's ongoing commitment to combat investment fraud and safeguard New Jersey residents. The Bureau encourages investors to "Check Before You Invest" by verifying the registration status and disciplinary history of any financial professional conducting business in New Jersey.