New Jersey and Other States Target Elon Musk-Endorsed AI Fraud Using Crypto

The companies inflate the future profit potential of the TruthGPT Coin, regulators say.

DALLAS, Texas – This month, Texas and other state regulators declared an emergency cease-and-desist order against an artificial intelligence-powered investment fraud allegedly promoted by Tesla and SpaceX billionaire CEO Elon Musk. This week, New Jersey became the latest state to join efforts to fight the crypto and AI fraud.

Sign up for the premium Crypto Investor newsletter today to get exclusive stories.

The government arrested the San Francisco-based Horatiu Charlie Caragaceanu for his role in the fraudulent scheme.

According to the order, Caragaceanu started two companies, The Shark of Wall Street and Hedge4.ai, which are peddling a cryptocurrency called TruthGPT Coin. The coin purportedly relies on an AI called “Elon Musk AI.”

The AI claims to analyze cryptocurrencies and model future crypto prices to help customers identify scams. The companies also inflate the profitability and investment potential of the crypto, by claiming TruthGPT Coin may spike in value up to 1,000 times.

Although Caragaceanu defended his companies as AI labs for ethical hackers, none of the state regulators are convinced.

Prior to the arrest, Caragaceanu said on his social media that he hopes to “help people make passive income through crypto trading and be millionaire by sitting at home and doing the work (sic).”

However, Texas regulators claim that TruthGPT Coin is not registered in Texas, and none of Caragaceanu’s companies obtained the requisite licenses to operate. TruthGPT Coin's website has shut down.

In recent weeks, global regulators have sounded the alarm about the risks of AI, with the European Union even proposing new rules around AI, including proscribing AI in predictive policing, biometric surveillance, and emotion recognition, among other categories.