The Securities and Exchange Commission (SEC) has settled charges with a trading firm that allegedly lied to investors about its claimed use of artificial intelligence (AI) to perform automated trading of cryptocurrency and other assets.
Itai Liptz, owner and CEO of investment firms Rimar LLC and Rimar USA, and Cliffard Boro, a Rimar USA board member, raised nearly $4 million from 45 investors by claiming that it could use AI to trade crypto, equities, bonds, and other investments, the SEC said Thursday.
But in reality, there was no use of AI, the SEC alleged—and the claims of using emerging technology were just “buzzwords” used to fool investors in what the agency described as “AI-washing.”
The Burlingame, California-based Rimar USA agreed to settle the charges and pay $310,000 in total civil penalties without admitting or denying the regulator’s findings.
“Through entities he controlled, Liptz lured investors and clients with multiple fabrications, including with buzzwords about the latest AI technology,” Andrew Dean, Co-Chief of the SEC’s Asset Management Unit, said in a Thursday release.
The lawsuit further alleged that despite Rimar claiming to have “an artificial intelligence-driven platform for trading, among other products, stock and crypto assets,” in reality it had “no trading application at all at the time of the fundraising, and has never had a trading platform for stock or crypto assets.”
Liptz agreed to pay disgorgement and prejudgment interest totaling $213,611, to pay a $250,000 civil penalty, and to be subject to an investment company prohibition and associational bar, the SEC said. Boro, meanwhile, agreed to pay a $60,000 civil penalty, and Rimar LLC consented to be censured.
Wall Street watchdog the SEC in January warned the public about how some “bad actors might use catchy AI-related buzzwords” in order to con would-be investors.
“As AI becomes more popular in the investing space, we will continue to be vigilant and pursue those who lie about their firms’ technological capabilities and engage in ‘AI washing,'” Dean added in Thursday’s release.
Edited by Andrew Hayward
Generally Intelligent Newsletter
A weekly AI journey narrated by Gen, a generative AI model.
Source: https://decrypt.co/285680/sec-trading-firm-tricked-investors-ai
