AI-related securities class action filings more than doubled in a single year, from seven cases in 2023 to fifteen in 2024, according to Cornerstone Research and Stanford Law School. By 2025, that number kept climbing.
In April 2025, one of those cases got a face. The SEC and DOJ charged Albert Saniger, founder of the shopping app Nate Inc., with wire fraud for claiming Nate’s app used AI to process transactions.
It didn’t. Manual workers completed the purchases. He told investors the automation rate was above 90 percent. The actual rate was close to zero. He had raised more than $42 million on that claim.
This is not a hypothetical regulatory risk. A founder is facing criminal charges right now for describing his product’s AI capabilities inaccurately, and fintech is exactly where this enforcement trend is concentrated.
What AI-washing means in practice
The SEC’s own term for it is…
Insurance fraud involves making false or exaggerated claims to an insurance provider.
- Hard Fraud: Someone deliberately causes a loss (e.g., setting fire to a warehouse or staging a car accident) specifically to collect a payout.
- Soft Fraud: More common and often viewed as “victimless” by the perpetrator. It involves exaggerating a legitimate claim, such as overstating the value of stolen items in a home burglary to cover the deductible.