DOJ, SEC Charge CEO Over Fake AI That Was Actually Human Workers in the Philippines

Startup CEO Charged After ‘AI’ Turns Out to Be Humans in the Philippines

A tech founder who raised over $40 million pitching a cutting-edge AI shopping app has been charged in the U.S. with fraud after it was revealed the AI powering the app was a call center full of human workers in the Philippines.

Albert Saniger, 35, founder and former CEO of “nate,” allegedly misled investors by claiming the company’s e-commerce app used proprietary AI to automate online purchases. […]

Saniger told investors that nate’s tech could smartly fill in shipping details, select sizes, and complete purchases without human involvement.

For example, if a shopper found a pair of sneakers online, they could open the nate app, tap “buy,” and the app claimed it would handle the rest, including selecting the size, entering payment and shipping details, and completing the purchase using AI.

But much like Elizabeth Holmes’ Theranos blood testing devices, it didn’t work, and the “AI” couldn’t handle most transactions.

So instead, nate quietly turned to humans and hired a call center of workers in the Philippines to mimic the automation users believed was happening behind the scenes.

Helium Issuer Nova Labs Agrees to Pay SEC $200K to Settle Allegations It Lied to Investors About Brand Partnerships

Nova Labs, the parent company behind the Helium blockchain, has agreed to pay the U.S. Securities and Exchange Commission (SEC) $200,000 to settle civil securities fraud charges the regulator filed against the firm in January, a court filing said Thursday.

Without admitting or denying any wrongdoing, Nova Labs agreed to pay the fine to settle accusations that it misled institutional investors during a funding round from late 2021 to early 2022, during which it raised $200 million in fresh capital at a $1 billion valuation. In its complaint, the SEC accused Nova Labs of lying to prospective investors about a number of big-name enterprise customers — including Nestle, Salesforce and Lime — it claimed were using the Helium technology.

The SEC accused Nova Labs of repeatedly exaggerating the nature of its relationships with these three corporations in order to secure investments, touting them as customers and “users” of its tech. According to the complaint, Nova Labs’ actual contact with Lime, Salesforce and Nestle was limited and primarily occurred before the launch of the Helium network in mid-2019.

Crypto Legislation Could Free Industry of SEC Oversight—But Critics Warn It’s a Pandora’s Box

But the Securities Clarity Act would avoid that process by going back and amending key securities laws, including the foundational Securities Act of 1933 and Securities Exchange Act of 1934, to explicitly exempt blockchain-based, fungible tokens from securities regulation.

That means tokens like Ethereum, Solana, Cardano, XRP, and potentially thousands of others—many of which that were, until very recently, the subject of SEC enforcement actions—would be formally exempt from SEC oversight. […]

Some experts say the move would cause ripple effects that extend far beyond crypto—and could implicate the foundations of securities regulation that have underpinned the U.S. economy since the New Deal.

The bill would, among other things, amend a key paragraph in the 1933 Securities Act defining a “security”; and while that language has been changed before via legislation, those edits typically expanded the definition of securities to keep up with new financial products. They appear to have never restricted the definition of a security.

Put more simply: that key paragraph of America’s defining securities law does not currently state that any sort of asset is not a security. The Securities Clarity Act would change that.

DOJ Crypto Enforcement Memo Has No Bearing on Do Kwon’s Criminal Case, Prosecutors Say

A recent U.S. Department of Justice staff memo dismantling the DOJ’s crypto unit and narrowing the scope of its crypto-related enforcement priorities will have no impact on the prosecution of Terraform Labs co-founder and former CEO Do Kwon, prosecutors said Thursday. […]

During a hearing on Thursday, U.S. District Court Judge Paul Engelmayer of the Southern District of New York (SDNY) asked prosecutors whether Blanche’s memo would have any impact on the charges against Kwon, which include two counts of commodities fraud and two counts of securities fraud, as well as five other charges including wire fraud and conspiracy to defraud. The prosecution told Engelmayer that they have “no plans” to change their charges against Kwon at this time.

Estate Planning for Bitcoiners: Optimized Strategies Using Bitcoin Life Insurance and Trusts

At its recent all-time high, the bitcoin market cap hit $2.1 trillion, indicating that significant wealth has been created for holders of the original cryptocurrency. With the regulatory tailwinds behind digital assets in the new administration and increasing institutional adoption, individuals and their advisors should consider strategies to mitigate potential estate taxes on bitcoin wealth.

McKinsey Promotes 56 to Senior Partner — Only 6 Are Women

McKinsey & Co.’s latest crop of 56 senior partners includes only six women, creating angst inside the consulting firm after it pledged to prioritize diversity while other blue-chip employers backtracked. Source: