The regulator is cracking down on high-yield investment products saying the programs raise hype with the promise of high returns before going dark.

A number of firms claiming to offer artificial intelligence-assisted crypto trading services have been hit with allegations of being “fraudulent investment schemes” by a California financial regulator, with two accused of using actors and AI to impersonate CEOs.

On April 19, the California Department of Financial Protection and Innovation issued desist and refrain orders against five entities purporting to use AI to trade crypto assets — Harvest Keeper, Visque Capital, Coinbot and QuantFund, along with Maxpread Technologies and its CEO Jan Gregory Cerato.

Scammers like to deceive investors by using phony CEOs, sham algorithms, & Ponzi schemes. Today, we've issued desist and refrain orders to five entities/individuals who violated CA securities laws. For more information: https://t.co/gj13z2OE4G#investing #hyip #Cryptonews pic.twitter.com/MXHPYwVIny

— CA Department of Financial Protection & Innovation (@CaliforniaDFPI) April 19, 2023

According to the regulator two of the firms even faked their CEOs. The purported technology firm Maxpread is alleged to have used an AI-generated avatar called “Michael Vanes” to act as CEO and market its products, with the supposed avatar appearing in YouTube promotions.

Harvest Keeper, which claims it’s a crypto trading firm, was accused of having hired an actor to play the role of its CEO, Markus Peters. The DFPI said Harvest described Peters as being the “leader” and “main generator of ideas.”

According to the DFPI, the entities were taking advantage of the hype surrounding AI to lure in investors with the promise of “incredible returns” by claiming to use the technology to trade crypto assets and — amongst other allegations — use multi-level marketing schemes to reward investors for recruiting others.

“The pitch was simple,” the DFPI said, adding:

“Investors were told that if they invested funds, these entities would use their knowledge, skill, experience, and AI to trade crypto assets and generate incredible profits for investors. In each case, these claims are false.”

The DFPI noted the entities “went to great lengths to appear as if they were legitimate businesses” saying they created professional websites, social media accounts and promotions from influencers.

The websites for both Harvest Keeper and Coinbot are down but the websites for the other three firms remain online.

Visque Capital offers a range of investment plans on its website, the most expensive plan claims investors would see returns of up to 3% per day.

Based on an initial investment of $50,000, the plan would supposedly give investors a return of around $270,000 after the full 180 days.

The DFPI alleges the schemes would seem to be working well initially, with early withdrawals processed and account balances steadily increasing.

Eventually, however, withdrawals would not be processed and the website would go offline, leaving investors with no way to access their funds.

Cointelegraph contacted Maxspread, Visque and Harvest Keeper for comment but did not immediately receive a response. Coinbot and Quantfund could not be reached for comment.

Source: Cointelegraph.