Securities regulators from Montana, Texas, and Alabama have jointly filed an enforcement action against cryptocurrency trading platform YieldTrust.ai, accusing it of “performing a Ponzi scheme.
YieldTrust.ai and its Romanian owner, Stefan Ciopraga, claim that the decentralized application (DApp) dubbed “YieldBot” was “powered by Powered by cutting-edge artificial intelligence” and “capable of executing 70x more trades and making 25x more profit than any human trader.” The regulator said YieldTrust had not provided investors with “any evidence” that the artificial intelligence (AI) bot existed, “let alone that it was performing at the level that YieldTrust.ai claimed.”
In its cease and desist order, the Montana regulator said YieldBot, developed for Binance’s BNB Smart Chain, can interface with staking programs to generate daily returns of up to 2.2% for new investors by: "[Analyze] the cryptocurrency market and make your own trading decisions in milliseconds, autonomously choose from hundreds of trading methods and chain them together to create unique strategies - for mind-blowing performance."
However, the state regulator claimed that an independent firm that audited YieldBot’s smart contracts found it to be “dangerous” because “the deployment team retained sufficient control to prevent users from withdrawing their assets.”
As noted in the regulator’s statement and highlighted in an April 4 tweet by Montana Securities Commissioner Troy Downing, scammers are apparently capitalizing on the hype surrounding artificial intelligence “by developing high-tech strategies to defraud investors.” By". An order from Montana regulators required YieldTrust.ai to cease and desist from all activities in the state and required fines totaling $100,000, while the Texas Securities Commission issued multiple cease and desist orders.
Following the release of an audit of its smart contracts, YieldTrust.ai allegedly announced that it would cease operations, which appears to be confirmed by a lack of transactional activity according to DappRadar data. However, the regulator’s order accuses YieldTrust.ai of “raising funds from the public to cover withdrawals from previous investors,” which, along with the promise of high returns, is characteristic of a Ponzi scheme.
YieldTrust.ai's website has gone offline and its Twitter account has been deleted. Cointelegraph could not contact YieldTrust.ai or Ciopraga for comment.
AI has become more prominent, accessible and surrounded by hype since AI research firm OpenAI released its ChatGPT AI chatbot on November 30. Although sometimes inaccurate, ChatGPT has proven to be a powerful tool, and the latest version is able to pass standards, improve SAT, and even identify vulnerabilities in smart contracts.
