New Jersey Attorney General Matthew Platkin and the state Division of Consumer Affairs announced May 11 the issuance of a Cease-and-Desist Order to stop an investment scheme that was purported to be powered by artificial intelligence and endorsed by Elon Musk.

In coordination with several states, the action was taken through the Bureau of Securities against Horatiu Charlie Caragaceanu and his organizations – The Shark of Wall Street and Hedge4.ai – which resulted in the takedown of the website for TruthGPT Coin, a cryptocurrency that purportedly uses an artificial intelligence model called Elon Musk AI.

Officials say that Caragaceanu describes those organizations as artificial intelligence labs that act through machine learning programmers and ethical hackers.

In the order, officials say that the respondents were promoting that this AI model could analyze various cryptocurrencies, predict future digital asset prices and differentiate profitable investments from scams, while also touting the profitability of the coin – claiming it would increase in value by as much as 1,000 times.

The order also laid out the extent of the misrepresentation of Musk’s endorsement, featuring manipulated avatars and images of the tech mogul backing the coin.

The misrepresentation also involved other notable public figures in this space, such as the founders of Binance, Changpeng “CZ” Zhao, and Ethereum, Vitalik Buterin, and the creator of Bitcoin, Satoshi Nakamoto, who were purported to be part of the TruthGPT ecosystem, which they were not.

In a press release, Platkin said these bad actors are making it seem as if using AI 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,” said Platkin.

Officials add that despite the representations and claims, the tokens never gained value and never secured listings on the major centralized cryptocurrency exchanges. The order says that the fair market value of each token is now $0.

Additionally, the TruthGPT Coin and the other investments named in the order were not registered for sale in New Jersey, officials noted, and Caragaceanu and his organizations have not been registered as dealers or agents.

“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,” said Cari Fais, acting director of the Division of Consumer Affairs. “But as we tell investors, if something seems too good to be true, it most likely is.”

Amy Kopleton, acting bureau chief, said her office continues to work to try and safeguard New Jerseyans from fraud and deceit in online investment offerings.

“And we urge investors to help protect themselves by looking past the flashy graphics and high return promises to approach new investment products with caution,” said Kopleton. “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.”

Further reading

• NJ’s newest fraud office announces 1st conviction
• Sicklerville woman sentenced for role in $3M COVID fraud scheme
• NJ doctor pleads guilty to $1.3M health care fraud scheme