By artificially creating the appearance of high trading activity, the startup Builder.ai, known in the field of artificial intelligence, along with the Indian company VerSe Innovation, allegedly misled investors and partners. These conclusions stem from internal documents that became available to journalists in 2025.
This is reported by Finway
Suspicions of Fraudulent Schemes and Builder.ai’s Bankruptcy
According to journalistic investigations, from 2021 to 2024, Builder.ai and VerSe Innovation regularly made payments to each other for similar amounts, simulating real sales. These actions may indicate the use of a round-tripping scheme, where companies exchange illiquid assets, creating the appearance of revenue growth and business activity on paper. Such activities allowed them to demonstrate positive development dynamics and financial stability to investors, which was, in fact, fictitious.
Suspicions of fraud led to Builder.ai initiating bankruptcy proceedings at the end of May 2025. The company, which had raised over $450 million in investments and was valued at more than $1 billion, was recognized as one of the unicorns in the global startup market.
Real Effectiveness of the AI Assistant and Job Losses
It turned out that a significant portion of the functions that Builder.ai attributed to its AI coding assistant were actually performed by contractors from Eastern Europe and India. Thus, the effectiveness of the software product was significantly exaggerated.
In February 2025, the company experienced a wave of layoffs that affected both regular employees and top management. Notably, CEO Sachin Dev Duggal and CFO Varghese Cherian left their positions. During this same period, Builder.ai engaged independent auditors to review its financial statements for the past two years.
“We are not the company that inflates revenues.”
It should be noted that similar allegations of fraud have previously been made against other companies in the field of artificial intelligence, including the CEO of the Nate project.