Former CEO Indicted for Allegedly Defrauding Investors in $40 Million AI Startup Scheme

A fintech startup that raised $40 million based on the premise of its artificial intelligence capabilities was fueled by human labor, allegedly defrauding investors lured by the new technology of millions, federal prosecutors said this week in a statement.

Indictment of Former CEO

Albert Saniger, 35, the former CEO and founder of nate in 2018, who is from Barcelona, Spain, was indicted in the Southern District of New York for engaging in a scheme to allegedly defraud investors and making false statements about his company's AI capabilities.

Nate, an e-commerce company, launched the nate app that claimed to streamline the online shopping checkout process via a single AI-powered tap option. But the app was not powered by advanced AI technology at all, according to the indictment. With the promise of custom-built "deep learning models" that would allow the app to directly purchase goods on product pages in fewer than three seconds, Saniger raised over $40 million.

The Fallout and Financial Impact

The aftermath of the company's fallout in 2023, left investors with near-total losses, the indictment said. U.S. private AI investment grew to $109.1 billion last year — and the U.N. trade and development arm said market share is poised to climb to $4.8 trillion by 2033.

AI is widely perceived as being free from human intervention but the reality paints a more complicated picture. Nate is not the only company that has capitalized on AI through cheap labor overseas.