May 4 (Cointime) - The promoter behind two cryptocurrencies that seek to benefit from Elon Musk's AI endeavors is being targeted by regulators in Texas. One of the cryptocurrencies is called Elon Musk AI Token, while the other is named after Musk's proposed competitor to ChatGPT, TruthGPT Coin.

The Texas State Securities Board has submitted a filing alleging that the two tokens are “part of a fraudulent securities scheme” and issued a cease-and-desist order alongside other states.

According to a press release from TSSB, the emergency cease and desist order was filed against Horatiu Charlie Caragaceanu and his organizations, The Shark of Wall Street and Hedge4.ai.

"In March 2023, the Respondents commenced the promotion of new digital asset investments. These products include TruthGPT Coin, a digital asset allegedly powered by an artificial intelligence model known as Elon Musk AI. The Respondents claim that TruthGPT Coin serves as the "Ultimate AI-Powered Cryptocurrency Investment Advisor" and that those who purchase TruthGPT Coin may earn up to 1000 times their principal investment." reads the order.

"The Respondents are also promoting Elon Musk AI Token, and they are offering TruthGPT Coin and Elon Musk AI Token through internet websites and social media platforms. The tokens are being marketed, in part, through avatars that visually and audibly depict Elon Musk favorably endorsing TruthGPT Coin and comparing it to ChatGPT." TSSB added.

Fake animated avatars and images of Musk are being used to demonstrate his endorsement, and the website for TruthGPT Coin allegedly creates the appearance that Changpeng “CZ” Zhao, the founder and CEO of Binance, and Vitalik Buterin, the founder of Ethereum, are part of the ecosystem.

“Artificial intelligence is designed to simulate human intelligence processes.  It’s a highly sophisticated concept, but that doesn’t mean current investment schemes tied to artificial intelligence are as sophisticated,” said TSSB Enforcement Director Joe Rotunda.  “At least for now, many of these scams are simply promoting lucrative profits coupled with little or no risk.  They’re publishing advertisements in social media, recruiting investors through direct messaging platforms, and creating internet websites that incorporate flashy graphics and technical terminology. Investors need to set aside emotion and objectively evaluate every offering – especially when pitched by an unknown person through the internet.”

According to the Texas action,  The Respondents engaged in a series of initial coin offers (ICOs) but despite their representations, the tokens previously offered by the respondents never significantly increased in price and the tokens never secured listings on major centralized cryptocurrency exchanges. The fair market value of each token is now $0, according to the orders.

TruthGPT Coin and the other investments named in the order have not been registered for sale in Texas, and Horatiu Charlie Caragaceanu, The Shark of Wall Street and Hedge4.ai have not been registered as dealers or agents.  They have 30 days to request a hearing.