The New Jersey Bureau of Securities issued a Cease and Desist Order against Horatiu Charlie Caragaceanu and his organizations for promoting TruthGPT Coin, a cryptocurrency scam that falsely claimed AI capabilities and endorsements from figures like Elon Musk. The respondents misrepresented the AI model's ability to predict cryptocurrency prices and manipulated images to show false endorsements, targeting investors with unrealistic profit promises.
The Cease and Desist Order requires the respondents to immediately stop promoting, offering, and selling TruthGPT Coin and other unregistered securities in New Jersey.
In-house legal teams should review all vendor, customer, and marketing agreements where the company promotes AI-driven financial products or services, particularly those involving cryptocurrency or investment offerings. Specific clauses to scrutinize include representations and warranties regarding AI functionality and predictive accuracy, endorsement and testimonial clauses (to ensure proper consent and avoid fabricated endorsements), marketing and advertising compliance provisions, and risk disclosure requirements. Agreements with third-party promoters or influencers should be examined for clauses requiring verification of claims and prohibiting false endorsements. Recommended changes include adding explicit disclaimers that AI models do not guarantee investment returns, implementing pre-approval processes for any endorsements or testimonials, and strengthening audit rights to verify compliance with advertised AI capabilities.
Entity
Horatiu Charlie Caragaceanu, The Shark of Wall Street, and Hedge4.ai
Also known as: Hedge4.ai
Industry
Financial ServicesOfficial Press Release
https://www.njoag.gov/new-jersey-bureau-of-securities-joins-other-states-in-effort-to-stop-artificial-intelligence-investment-scam/
2023 0510 TruthGPT Coin C&D
https://www.nj.gov/oag/newsreleases23/2023-0510_TruthGPT-Coin-C&D.pdf
New Jersey Attorney General Enforcement Page
https://www.njoag.gov/about/divisions-and-offices/division-of-consumer-affairs/
"Horatiu Charlie Caragaceanu and his organizations, The Shark of Wall Street and Hedge4.ai (collectively, “Respondents”)."
"promoting TruthGPT Coin, a cryptocurrency that purportedly uses an artificial intelligence model called Elon Musk AI."
"According to the Cease and Desist Order, the Respondents are misrepresenting Elon Musk’s endorsement of TruthGPT Coin, and they are manipulating animated avatars and images of Elon Musk to falsely demonstrate his endorsement."
"The Bureau issued the enforcement action in coordination with several states bringing actions against Horatiu Charlie Caragaceanu and his organizations."
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