Replacement of humans by machines

State regulators sound alarm on investment platform using AI to mislead US investors

Securities regulators in the United States have raised the alarm over the activities of, a project purporting to use artificial intelligence (AI) to make profits for investors, on the grounds that it bears similarities to a Ponzi scheme.

The Texas State Securities Board and the Montana Securities Commission are following the lead of the Alabama Securities Commission in filing enforcement actions against Relevant documents showed leverages social media to market its AI-powered decentralized application (dApp) known as Yieldbot, which it says could generate massive profits for investors.

Investors are baited with the offer of returns of 2.2% per day using the bot “capable of executing 70 times more trades with 25 times higher profits than any human trader could.” The three state regulators warned investors that could be an ingenious scam as it shows the classic signs of a Ponzi scheme with new investments used to settle old customers.

The Texas State Securities Board arrived at its conclusion following an independent audit of the platform’s smart contracts. According to the findings of the audit firm,’s smart contract gave the deploying team “control to block users from withdrawing their assets.”

“The actions accuse of illegally soliciting investments tied to a decentralized application (dApp) that purportedly uses quantum artificial intelligence to trade digital assets,” said the Texas securities regulator. “The initial scheme recently collapsed, and the respondents are now allegedly perpetrating a Ponzi scheme by raising capital from new investors to cover withdrawals from previous investors.”

While Texas regulators issued a cease and desist order against, U.S. states Montana and Alabama have imposed fines running up to $100,000 against the project.’s website and Twitter account appear to have been deleted since the publication of the smart contract audit.

Data from DappRadar also reveal an absence of trading activity since March 17, only days after the release of the smart contract audit.

The rise and rise of AI scams

As AI takes the world by storm, scammers are riding the wave to fleece investors of their funds. A new report from on-chain security firm CertiK revealed that AI-based Harvest Keeper had stolen over $1 million in jaw-dropping rug pull and ice phishing transactions.

Other AI-backed virtual currency projects are rising in popularity on the back of ChatGPT, with “CryptoGPT” appearing at the top of Twitter trends. Several cybersecurity firms have warned investors to exercise extreme caution and conduct due diligence before interacting with such projects.

“Artificial intelligence may be an exciting concept, but scammers are attempting to capitalize on the excitement by developing high-tech ploys to deceive investors,” said Montana state auditor Troy Downing.

In order for artificial intelligence (AI) to work right within the law and thrive in the face of growing challenges, it needs to integrate an enterprise blockchain system that ensures data input quality and ownership—allowing it to keep data safe while also guaranteeing the immutability of data. Check out CoinGeek’s coverage on this emerging tech to learn more why Enterprise blockchain will be the backbone of AI.

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