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Sustainability Times
11-06-2025
- Business
- Sustainability Times
Shocking Revelation in Tech Industry: A 1.5 Billion Dollar 'Fake AI' Exposed With 700 Real-Time Coders Operating From India
IN A NUTSHELL 🔥 , a British startup, was exposed for using 700 engineers in India instead of advanced AI technology to code applications. , a British startup, was exposed for using 700 engineers in India instead of advanced technology to code applications. 💰 The company raised over $480 million from investors like Microsoft, only to inflate revenue projections by 300% and face financial turmoil. ⚖️ Ongoing investigations include a UK insolvency process and a US federal probe, with founder Sachin Dev Duggal facing money laundering allegations in India. 🌐 The scandal highlights the widespread issue of 'AI washing' in the tech industry, where human labor is misrepresented as AI work. In the fast-paced world of technology, the allure of artificial intelligence (AI) often promises to streamline processes and reduce human intervention. However, the story of a British startup once valued at $1.5 billion, reveals a darker side to this narrative. The company, which claimed to revolutionize app development through AI, was found to rely heavily on manual coding by 700 engineers in India. As the facade crumbled, it became a cautionary tale of how technological advancements can sometimes mask traditional labor practices. This incident underscores the importance of transparency and ethical practices in the tech industry. The Illusion of Revolutionary AI led by founder Sachin Dev Duggal, captivated investors with the promise of making app creation as easy as ordering a pizza. The centerpiece of this promise was a virtual assistant named 'Natasha,' heralded as a groundbreaking AI capable of developing custom applications with minimal coding. However, beneath this innovative veneer, the reality was starkly different. Reports revealed that the so-called AI relied on the relentless work of 700 developers in India, who manually coded applications based on client requests. This labor-intensive process was cleverly hidden behind the guise of sophisticated AI technology, misleading investors and clients alike. With financial backing from notable entities like Microsoft and the Qatar Investment Authority, successfully raised over $480 million. Yet, the company's house of cards began to tumble when the truth emerged. The reliance on human coders instead of advanced AI technologies exposed the firm to scrutiny and led to an investigation into its operational practices. This revelation not only shocked the tech community but also raised questions about the legitimacy of AI claims in the industry. 'Nasa Confirms the Unthinkable': China's Giant Water Diversion Project Will Slow Earth's Rotation and Disrupt Global Timekeeping Financial Fallout and Investigations The unraveling of operations had severe financial repercussions. Viola Credit, an investor, withdrew $37 million from the company after discovering that projected revenues had been inflated by 300%. The startup's forecasted revenue of $220 million was a gross exaggeration, with audits revealing actual figures closer to $50 million. This misrepresentation led to a liquidity crisis, leaving the company with only $5 million in accessible funds, which were subsequently frozen due to legal restrictions. The financial turmoil prompted Manpreet Ratia, appointed as president after the resignation of his predecessor, to file for bankruptcy. As the company navigates insolvency proceedings in the UK, US prosecutors have launched a federal investigation, demanding the company's financial records and client lists. Additionally, founder Sachin Dev Duggal faces allegations of money laundering in India, further complicating the legal landscape surrounding Earth Is Slowing Down as China's Gigantic Water Project Forces a Planetary Shift Confirmed by NASA's Latest Alarming Report A Widespread Phenomenon The scandal is not an isolated incident. The practice of 'AI washing,' where companies attribute human work to AI, is becoming alarmingly common. Amazon faced a similar controversy with its 'Just Walk Out' technology, which involved over 1,000 human operators in India. Additionally, several accounting services, advertised as automated, were found to employ Filipino workers for manual tasks. This deceptive practice raises ethical concerns about the transparency and integrity of AI claims in the tech industry. The repercussions of such practices extend beyond financial deceit. They affect the livelihoods of workers, particularly in regions where labor is outsourced. In case, nearly 1,000 employees were laid off, and the platform 'Natasha' was discontinued. These events highlight the need for stringent regulations and accountability in AI development and deployment, ensuring that innovation does not come at the cost of ethical integrity. 'China Finally Sells Record-Breaking Plane': This 130-Foot Giant Can Dump 26,000 Pounds of Water in One Jaw-Dropping Drop The Broader Impact on the Tech Industry The collapse of serves as a wake-up call for the tech industry. It underscores the importance of due diligence and transparency in technological advancements. Investors and consumers must be vigilant and skeptical of grandiose AI claims, demanding evidence of authenticity and ethical practices. The tech community must foster an environment where innovation is not only celebrated but also accountable. As AI continues to evolve, the industry must prioritize ethical guidelines and transparency to maintain trust and credibility. The incident is a stark reminder that behind every technological innovation, there must be a commitment to honesty and integrity. As we navigate the future of AI, how can the industry ensure that advancements are both groundbreaking and ethical? 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Time of India
09-06-2025
- Business
- Time of India
A startup was said to be ‘passing off' humans as AI. That's not why it collapsed
Once valued at $1.5 billion, the Microsoft-backed was supposed to make app-building 'as easy as ordering a pizza'. But then, it was alleged that its 'AI' was fake. And eventually, it was said, so were its revenues It is the most ' high-profile ' AI startup collapse in recent times. And a convoluted story ties it to story begins with a startup that said it could help anyone put together an app without any code — in 2016 , long before ChatGPT and Claude made it look so easy. The London and Los Angeles-based startup was founded by a British entrepreneur of Indian origin, Sachin Dev Duggal , and would eventually be known as . And, as the 'ai' in its name indicated, it would use artificial intelligence to turn app-building into what it said would be a process ' as easy as ordering a pizza '.
Telegraph
08-06-2025
- Business
- Telegraph
British AI start-up embroiled in sex assault claims after going bust
The acrimonious collapse of one of Britain's most feted AI start-ups came after it faced allegations that a senior executive sexually assaulted a former member of staff, The Telegraph can reveal. The alleged assault took place at a hotel in India in 2022 and was reported to the police at the time. A board member alerted management to the claims, which were also the subject of a public petition to remove the executive. The Telegraph is aware of the identities of the alleged perpetrator and victim but cannot name them for legal reasons. The alleged assault was said to have taken place when the executive was on holiday and not on company business. The individual has since left the company. However, The Telegraph understands the incident remains the subject of ongoing legal proceedings in India against the police for alleged failure to investigate the complaint properly. A police filing reported in Indian media at the time, which did not name Builder AI, alleged the victim was forced to take a pill at 3am after meeting the executive in a hotel bar, and was later seriously assaulted in a hotel room. The alleged victim told her sister and friends, who urged her to take the incident to the police. It is understood the executive denied any wrongdoing. Builder AI commissioned an internal investigation into the matter, led by the company's general counsel. Sachin Dev Duggal, Builder AI's ousted chief and founder, is said to have recused himself from the investigation and received the final report. There is no suggestion of wrongdoing by Mr Duggal. Despite the investigation, Manpreet Ratia, Builder AI's new chief executive, this weekend insisted the full board and wider executive team at Builder AI had not been informed of the matter. Builder AI said: 'The matter was first raised with the company by an individual board member, acting in their personal capacity. 'Based on internal emails reviewed to date, it appears that Sachin Duggal recused himself from involvement in the matter. 'The company has been informed that a report was submitted by the general counsel to Sachin Duggal and the individual board member, concluding that no further action was warranted. This report was not shared with the broader board or the executive leadership. 'For avoidance of doubt, the full board of directors and the executive team were not made aware of this matter at the time it arose.' The statement added the wider board was first made aware of the claims after being contacted by The Telegraph, and that the investigation had not been overseen or directed by the board. The sexual assault claims at Builder AI, which have not previously been reported, come days after the business filed for bankruptcy in the US amid reports that inflated sales precipitated its dramatic collapse. Builder AI's lenders pulled support from the business earlier in May after forecast sales failed to materialise and came in far below expectations. Predicted sales of $220m (£163m) came in at closer to $50m. The company has been served with subpoenas by US prosecutors in New York, who have asked for information on its financial reporting and accounting, The Telegraph understands. Mr Duggal, Builder AI's founder and 'chief wizard', launched the business in 2016 with the aim of making building an app as 'easy as ordering a pizza'. The company offered what it called 'human-assisted AI', using a chatbot called Natasha and human contractors to quickly and cheaply build apps. The company raised $250m from investors, including Microsoft and venture capital investors Jungle Ventures and Insight Partners, who bought into Mr Duggal's vision. However, Mr Duggal was ousted in February after the board found that the company's revenues for 2024 were far lower than had been forecast. The events ultimately led lenders to pull $40m from the company's accounts in May, according to a letter to investors, forcing the UK-headquartered start-up to file for bankruptcy in the US. Last week, the Financial Times reported Builder AI was suspected by former employees to have engaged in multiple methods to boost revenues, including alleged circular transactions and deals with resellers that took years to pay up. A source familiar with the company's finances, however, denied this, and insisted its revenues were always reported properly, transparent and said that business with partners was legitimate. Builder AI collapsed with liabilities of up to $100m, bankruptcy filings show. According to the note to investors, the company owed more than $88m to cloud providers, such as Amazon. The start-up had been widely hailed as UK AI champion. Mr Duggal was named an EY World Entrepreneur of the Year in 2024. Its failure, and the sexual assault allegations, threaten to cast a shadow over Britain's AI ambitions.
Yahoo
06-06-2025
- Business
- Yahoo
Administrators lined up for UK arm of Microsoft-backed Builder.ai
Administrators are on standby to handle the collapse of the UK arm of a Microsoft-backed start-up which has filed for bankruptcy protection in the US. Sky News has learnt that Alvarez & Marsal (A&M) has been lined up to oversee the insolvency of UK entities. News of the impending appointment comes days after which was founded by Sachin Dev Duggal, collapsed in the US. Money latest: Mr Duggal stepped down earlier this year. had raised hundreds of millions of dollars from investors, including a Qatari sovereign wealth fund, helping it to achieve a 'unicorn' valuation of more than $1bn. The company said it used artificial intelligence to make the process of building an app "as easy as ordering pizza". In recent weeks, however, media outlets including the Financial Times have alleged the company used potentially bogus sales figures to attract investment. Read more from Sky News: The newspaper also reported that Mr Duggal had sounded out potential backers to buy the business out of insolvency proceedings. It was unclear on Friday whether any meaningful assets remained within UK corporate entities. A spokesman for A&M declined to comment.
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First Post
05-06-2025
- Business
- First Post
Behind bankruptcy plea of London start-up: It hired 700 Indian engineers to pose as AI tools
A major AI scandal has shaken the tech world as once valued at $1.5 billion, has filed for bankruptcy. The company, backed by Microsoft and a Qatari sovereign fund, falsely claimed to build apps in minutes using AI, while actually relying on hundreds of human engineers in India. read more Behind bankruptcy plea of London start-up: It hired 700 Indian engineers to pose as AI tools London-based once valued at $1.5 billion and backed by Microsoft and Qatar's sovereign wealth fund, has filed for bankruptcy after it was revealed that its so-called was mostly done manually by engineers in India, According to a report from The Times of India. According to the report, round 700 Indian engineers were while developing apps. The startup had raised over $445 million by promoting its AI-based app development platform. STORY CONTINUES BELOW THIS AD The company marketed its platform as using AI to build apps quickly, powered by a digital assistant named 'Natasha.' Most of the coding was done manually However, reports revealed that most of the coding was actually done manually by Indian tech workers, while the company falsely presented their work as AI-generated. The collapse of The collapse began in May 2025 when lender Viola Credit seized $37 million from accounts after discovering the company had inflated its 2024 revenue by 300 per cent. Founder Sachin Dev Duggal had claimed $220 million in sales, but an audit revealed the actual figure was just $50 million. All engineer, no AI Concerns about AI claims had surfaced as early as 2019, when The Wall Street Journal reported that the platform largely depended on human engineers rather than real AI. Former employees described it as 'all engineer, no AI,' according to the report. The scheme fully unravelled when the new CEO, Manpreet Ratia, who replaced Duggal in February, discovered the extent of the financial misreporting. US prosecutors have since launched an investigation and requested access to the company's records and customer data. Biggest AI startup collapse downfall is considered the biggest AI startup collapse since the ChatGPT-driven investment boom began. The company now owes $85 million to Amazon and $30 million to Microsoft in cloud computing bills. About 1,000 employees have lost their jobs. 'AI washing' in the time of boom The case has sparked renewed concerns over 'AI washing', a growing trend where companies rebrand traditional services as AI-powered to attract investment during the current tech boom.
