Regulators in Texas are targeting the promoter behind two cryptocurrencies that aim to capitalize on Elon Musk’s AI pursuits, Bloomberg reported May 3.

One of the cryptocurrencies is simply titled Elon Musk AI Token. The other is named TruthGPT Coin after Musk’s proposed ChatGPT competitor of the same name.

Joe Rotunda, enforcement director for the Texas State Securities Board (TSSB), suggested that the tokens aim to capitalize on those efforts illegitimately. He said:

“We’ve got Elon Musk, artificial intelligence — it checks all the boxes …This is an attempt to leverage that popularity to sell products that are fraudulent.”

The TSSB 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.

The individual who is allegedly responsible for promoting both assets is San Francisco resident and entrepreneur Horatiu Charlie Caragaceanu.

Caragaceanu claimed the tokens are powered by a trading platform that uses an AI algorithm developed by Musk to create trading strategies. It does not appear that Musk has created any such system.

Joe Rotunda, enforcement director at the Texas State Securities Board, said his agency attempted to contact Musk but has not received a response.

The TSSB’s filings also name Caragaceanu’s company, The Shark of Wall Street, as a promoter of the assets. Furthermore, the regulator noted that Caragaceanu’s earlier assets, including various NFTs and a Shark of Wall Street token, have lost their value.

In recent months, numerous crypto projects have otherwise attempted to capitalize on trends related to ChatGPT and other AI projects.

Perhaps the most famous (or infamous) example is CryptoGPT, which supposedly intends to make use of AI but has no direct connection to the ChatGPT chatbot. Other, more clearly fraudulent examples of ChatGPT honeypot tokens exist as well.

On May 2, digital artist Rhett Mankind said he used AI to create a memecoin. That asset saw $26 million in trading volume on Uniswap over 24 hours.

The post Texas regulators target crypto tokens capitalizing on Elon Musk, TruthGPT appeared first on CryptoSlate.

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