The fintech startup, which raised $40 million this week on the premise of artificial intelligence capabilities that federal prosecutors allegedly scam millions of new technology investors, is said to have been supported by human labor.
Albert Sanigar, 35, a former CEO and founder of Nate in 2018, is a native of Barcelona, Spain, and was charged in the Southern District of New York for scamming investors and engaging in a scheme to make false statements about the company’s AI capabilities.
E-commerce company Nate has launched a Nate app that claims to streamline the online shopping checkout process via a single AI-powered tap option. However, the app, according to the indictment, did not feature advanced AI technology.
With the promise of a custom-built “deep learning model” that allows the app to purchase products directly on product pages in under three seconds, Saniger has raised over $40 million. While instructing employees to maintain their reliance on Nate’s secrets on overseas workers, he pitched investors an AI-driven product that can trade 10,000 people every day.
Instead, the app is said to have relied heavily on foreign workers from two different countries who mimicked what users believed was being done by automation. Meanwhile, Sanigar is said to have told investors and the public that the transaction was completed by AI.
“It is said that Sanigar has abused the integrity associated with his previous position as CEO in order to perpetuate the smoke-and-mirror-filled scheme,” the U.S. Department of Justice said in a statement.
In the absence of the technology, Sanigar is said to have been heavily dependent on hundreds of workers in call centres in the Philippines, court documents said. When a fatal tropical storm struck the country in October 2021, Nate said he had set up a new call centre in Romania to handle customer service backlogs. Sanigarh directed that investors should prioritize transactions to avoid doubt, so investors would not have been exposed to a transaction lull.
The aftermath of the company’s fallout in 2023 left investors with nearly similar losses, the indictment said.
US private AI investments rose to $100 billion last year. The UN Trade and Development sector said its market share is ready to rise to $4.8 trillion by 2033.
Although AI is widely recognized as free from human intervention, reality draws more complicated pictures. Nate is not the only company that has used AI through cheap labor overseas.
In 2023, the Washington Post exposed a “digital sweatshop” in the Philippines, with employees working on content to refine American AI models called scale AI, which are exploited by multinational technologies like META, Microsoft and Openai.
CBS News has contacted the U.S. Lawyers’ Office and Sanigar for comment.
