U.S. state regulators call AI trading dApp a ponzi scheme, here’s why
The cryptocurrency trading platform YieldTrust.ai is being sued by securities authorities from Montana, Texas, and Alabama for perpetrating a Ponzi scheme.
YieldTrust.ai and its Romanian owner, Stefan Ciopraga, claimed the decentralized application called “YieldBot” is “powered by cutting-edge artificial intelligence.”
They further stated that it is “capable of executing 70 times more trades with 25 times higher profits than any human trader could,” according to statements from state regulators on 4 April.
The regulators claim YieldTrust failed to show investors “any proof” that the AI-driven bot even existed. YieldBot was created for Binance’s BNB Smart Chain and could interface with staking programs to produce returns for new investors of up to 2.2% per day, according to Montana’s regulator, who issued the cease-and-desist order.
He said:
“[Analyzing] the crypto markets and – in milliseconds – make its own trading decisions, autonomously choosing from hundreds of trading methods and chaining them together to create unique strategies – achieving an exhilarating performance.”
The deploying team “retained sufficient control to block users from withdrawing their assets,” according to the state regulators. The regulators also proclaimed that an independent firm that audited YieldBot’s smart contract found it to be dangerous.
In addition, the securities commissioner of Montana, Troy Downing, tweeted on 4 April that scammers are leveraging the hype surrounding AI to deceive investors.
Furthermore, the website for YieldTrust.ai was pulled down and its Twitter account was deleted. Since the 30 November launch of the ChatGPT chatbot by research firm OpenAI, AI has gained significantly more notoriety, accessibility, and hype.
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