LogInThousands of bots helped the scammer play the system.
Unfortunately, with the surge in AI-related fraud over the past year, it's difficult nowadays to surprise anyone with news of yet another scammer trying to swindle the online community out of its hard-earned cash with the help of artificial intelligence. However, the latest such case revealed by the US Department of Justice sounds so outlandish, it can make even the most hardened news junkies scratch their heads in disbelief.
According to the official statement published by the DOJ, the FBI has arrested a 52-year-old musician Michael Smith, charging him for presumably earning over $10 million in royalties through a fraudulent scheme that involved artificial intelligence and thousands of bot accounts. The alleged perpetrator faces charges of wire fraud conspiracy, wire fraud, and money laundering conspiracy, each carrying a maximum penalty of 20 years in prison.
As revealed in the announcement, Smith supposedly collaborated with two anonymous individuals, one of whom is reported to be the CEO of an AI music company, as far back as 2018 to swindle music platforms through the power of artificial intelligence. As part of the scheme, the CEO in question has been providing Smith with thousands of AI-generated songs each week, which Smith was subsequently uploading to various streaming platforms under random names and titles to obscure the fact that the songs were made by machines.
Furthermore, Smith employed an army of bot accounts to generate hundreds of thousands of streams – around 660,000 a day – across all the AI-made tracks, thus yielding more than $1.2 million annually. The scammer was also smart enough to not put all the eggs in one basket, spreading billions of fake streams across all the hundreds of thousands of songs to avoid suspicion, as each song would only have a small number of streams.
The report also claims that Smith repeatedly lied to streaming platforms by agreeing to terms and conditions that prohibited streaming manipulation. As a result of these manipulations, the statement concludes, Smith and his cronies earned more than $10 million in royalty payments from companies such as Amazon Music, Apple Music, Spotify, and YouTube Music.
"Michael Smith allegedly produced hundreds of thousands of songs with artificial intelligence and utilized automatic features to repeatedly stream the music to generate unlawful royalties to the tune of $10 million," the FBI says. "The defendant's alleged scheme played upon the integrity of the music industry by a concerted attempt to circumvent the streaming platforms' policies. The FBI remains dedicated to plucking out those who manipulate advanced technology to receive illicit profits and infringe on the genuine artistic talent of others."
When contacted by the New York Times about the accusations, Smith claimed that "there is absolutely no fraud going on whatsoever", describing the charges as "wrong and crazy" and planning to appeal his arrest.
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