Aidatify project counterfeiting: exporting to domestic sales, fake VC "investment" of 17.5 million dollars in a sham AI project

Author: Siwei Guai Guai

Source: BlockBeats

When the market is bad, the monsters come out.

Last night, I saw a colleague post a news article that completely confused me: How come I’ve never heard of this AI project that raised so much money?

I checked their official Twitter, and lo and behold, no one I follow is following them either. If a project is in this situation, I generally won’t bother looking further. In the crypto world, if a gem is discovered only by you, it often doesn’t mean you have a keen eye for treasure, but rather that it’s a scam that others want nothing to do with.

"Frankenstein" Project

In the spirit of being responsible to my colleagues, I decided to keep looking. My colleague said Aidatify is a full-chain AI aggregator, and by the name, one might think it integrates AI services and resources across multiple blockchains.

According to the project’s official introduction, it is actually a DEX data aggregator, with product functions similar to DefiLlama. The reason it can be associated with AI is that Aidatify claims to have advanced AI technology that can process 500 TB of data and 3 million smart contract addresses daily.

What does 500 TB mean? If a photo is 2MB, it would need to process 250 million photos a day; if a 4K movie is 50GB, it would need to process 10,000 4K movies a day. In simple terms, only major internet companies can handle data at this scale, and for a project that raised less than $20 million to claim this is quite exaggerated.

In the white paper, Aidatify also emphasizes that it can recommend high-yield, low-risk DeFi products to users through machine learning and deep learning algorithms. However, it doesn’t specify what algorithms it uses to achieve this.

Perhaps thinking that just having an "AI" buff isn’t enough, Aidatify added another buff of "lossless re-staking mining." One could say it has stitched together all the narrative hotspots of this year.

I wonder how others feel about this statement; for me, seeing the words "lossless" makes me uneasy, as my first loss in the crypto world was with the Luna stablecoin. When a project claims that the yield products it offers are risk-free, then that project itself is the biggest risk.

Suspicious Funding and Shady Lead Investor

Let’s return to the $17.5 million Series A funding announced by Aidatify. This amount is certainly not small, especially since VCs are generally tight on cash these days; it seems very suspicious for a team without a background to raise so much money.

First, there is a clear inconsistency between the funding information released by Aidatify and its token economic model. Aidatify announced it completed a $17.5 million Series A funding at a valuation of $150 million. However, according to its token economic model, the fully diluted valuation (FDV) of the AID token is only $1 million (100 million tokens * $0.01 each). Investors put in $17.5 million, but according to the token distribution, the tokens allocated to VCs are worth only $100,000 (10 million AID * $0.01 each).

Secondly, the lead investor SM Capital is also a shady VC. According to its official website, SM Capital was established in 2011 and is an investment team from Wall Street managing over $2 billion in assets. Strangely, although the website lists many portfolios, there are no news announcements about SM Capital investing in these projects. After BlockBeats verified with some of the projects mentioned, they all reported that they did not recognize this VC at all.

Investment portfolio listed on SM Capital's official website

I checked SM Capital's official Twitter, which shows it was registered in November 2011, but the earliest tweet was only posted last week. Besides Aidatify, no other project is followed. Out of 3,840 followers, only 8 have blue checkmarks; the rest seem like purchased followers that disappear after a while.

Chinese Project Exposed

At this point, I am quite certain that this funding news is just a scam by a shady project and a shady VC to deceive investors, and it’s a Chinese project.

Why a Chinese project? Don’t be fooled by the white paper that introduces a team of foreigners all graduated from prestigious universities; the small details on the official website and promotional video reveal the truth.

First, the language options on the official website are only English and Chinese. Typical foreign projects wouldn’t be so considerate.

Even more absurdly, the two promotional videos released by the official account have English voiceovers, but the subtitles are only in Chinese, with no English subtitles at all. So it’s hard to say that this video wasn’t tailor-made for a Chinese audience. The entire English voiceover, sprinkled with some AI and blockchain jargon, is just to make it hard for investors to understand. Only by being incomprehensible can they deceive!

Conclusion

The funding news of Aidatify not only misled many media colleagues in the crypto space, but even the well-known venture capital database site PitchBook also stumbled.

On the PitchBook website, Aidatify's funding is attributed to another SM Capital. According to the PitchBook website, this SM Capital is a European VC established in 2021, headquartered in San Marino, which has previously invested in fintech companies like Stripe, Qomodo, and even Musk's SpaceX. I wonder if Aidatify feels shocked to be listed alongside these top companies?

Here’s a reminder to all readers: do not blindly rely on information from a single source; always conduct cross-verification to ensure the accuracy of the information and avoid being deceived.