TheBlock
The U.S. Securities and Exchange Commission has filed suit against the founder of Privvy, alleging a $12.3 million crypto scheme in which investors were told their funds would be managed by sophisticated AI trading bots — bots that, according to the SEC, were neither artificial intelligence nor automated in any meaningful sense.
The case fits a pattern the SEC has pursued aggressively in recent years: fraudsters layering AI buzzwords over what are effectively unregistered securities offerings and Ponzi-style fund misappropriation. When the underlying technology is exposed as fiction, investors are left with losses and the promoter faces civil — and potentially criminal — liability.
For the broader crypto market, the Privvy lawsuit is another reminder that "AI-powered" yield claims warrant deep scrutiny.
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