Regulators in the American states of Texas, Montana, and Alabama have accused cryptocurrency trading platform YieldTrust.ai of operating a Ponzi scheme.
According to the regulators, YieldTrust.ai and its Romanian owner, Stefan Ciopraga, claimed that cutting-edge artificial intelligence powered their decentralized application (DApp) called “YieldBot.ai”. The owners also claimed that it was capable of executing 70 times more trades with 25 times higher profits than any human trader could.
AI Trading Bot Non-Existant in YieldTrust.ai
The regulators alleged that YieldTrust.ai did not provide any proof to investors that the AI-powered bot exists, let alone that it is performing at the level YieldTrust.ai claims. Montana’s regulator stated in its cease and desist order that YieldBot was developed for Binance’s BNB Smart Chain and could interface with staking programs to generate returns for new investors of up to 2.2% per day. However, the state regulators claimed that an independent firm that conducted an audit of YieldBot’s smart contract found it to be dangerous, as the deploying team retained sufficient control to block users from withdrawing their assets.
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MT Regulators Seek $100k in Fines
The regulators’ statements and highlighted in an April 4 tweet from Montana’s securities commissioner, Troy Downing, scammers are apparently capitalizing on the hype surrounding AI by developing high-tech ploys to deceive investors. The orders from Montana’s regulator demand YieldTrust.ai to cease and desist all activity in the state and seeks a total of $100,000 in fines, while the Texas State Securities Board issued multiple cease and desist orders.
What Makes YieldTrust.ai a Ponzi Scheme?
After the audit of its smart contract came to the fore, YieldTrust.ai allegedly announced it would cease operations, which appears to be verified by the lack of trading activity, according to DappRadar data. However, the regulator’s orders accuse YieldTrust.ai of raising capital from the public to cover withdrawals from prior investors, which, alongside the promise of high returns, are the characteristics of a Ponzi scheme.
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Always Be Careful with AI-Based Trading Apps
This news serves as a reminder to investors to exercise caution when investing in AI-based trading apps or any other cryptocurrency platforms that promise high returns without providing any substantial proof of their claims. In recent years, many investors have fallen prey to Ponzi schemes and other fraudulent investment opportunities, losing their hard-earned money in the process. As the popularity of cryptocurrency continues to grow, it is essential to remain vigilant and conduct thorough research before investing in any platform.
While AI-powered trading apps may seem like an excellent investment opportunity due to their ability to execute trades autonomously and with higher profits, investors must remember that these apps are only as reliable as the technology and algorithms that power them. It is crucial to look beyond the hype and marketing claims and focus on the underlying technology and the team behind the app to ensure that it is legitimate and trustworthy.
Key Takeaways
In conclusion, the allegations against YieldTrust.ai highlight the need for investors to remain vigilant and exercise caution when investing in cryptocurrency platforms. It is essential to conduct thorough research and due diligence before investing in any app or platform, particularly those that promise high returns without providing any substantial proof of their claims. By doing so, investors can avoid falling prey to fraudulent schemes and protect their hard-earned money from scammers and fraudsters.
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