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In June 2025, a shocking revelation shook the tech world. Builder.ai, a British startup once valued at over $1.5 billion, was exposed for employing hundreds of human developers in India while falsely claiming its product was powered by advanced artificial intelligence. This scandal highlighted questionable practices by companies riding the AI wave to attract investors and customers. Trust in technological innovation is crucial, and this deception has raised essential questions about the ethics and transparency of tech companies.
The Inside Story of Builder.ai
The story of Builder.ai begins with its founder, Sachin Dev Duggal, who successfully raised over $500 million from giants such as Microsoft and the Qatar Investment Authority. The enticing promise was a platform capable of creating customized applications with minimal effort, thanks to an AI dubbed “Natasha.” However, reality told a different tale. Behind this technological facade, 700 Indian engineers were discreetly coding clients’ requests in real-time.
This ruse allowed Builder.ai to convince its investors of the validity of its technology while artificially inflating its revenue forecasts. Nonetheless, revelations from former employees and an independent audit exposed the extent of the deception. The startup’s actual revenues were significantly lower than projected, leading to disastrous financial consequences.
Judicial and Financial Consequences
The downfall of Builder.ai was swift and brutal. In light of the fraud discovery, Viola Credit recovered $37 million of the $50 million invested, revealing that the company had overstated its revenues by 300%. The remaining $5 million was frozen, preventing salary payments. Manpreet Ratia, recently appointed president, had to file for bankruptcy while pledging to cooperate with authorities.
The insolvency procedure commenced in the UK, with an administrator tasked with evaluating recovery possibilities. In the United States, prosecutors in New York demanded Builder.ai’s financial statements to conduct a federal investigation. Sachin Dev Duggal, meanwhile, faces a money laundering investigation in India related to the Videocon group. This case illustrates the financial and legal risks companies face when engaging in “AI washing.”
The Phenomenon of AI Washing
Unfortunately, Builder.ai is not an isolated case. “AI washing” is a practice where companies attribute tasks to artificial intelligence that are actually performed by humans. This phenomenon recently emerged at Amazon, whose “Just Walk Out” system employed over 1,000 human operators in India. Similarly, some ostensibly automated accounting services were in fact managed by Filipino employees.
This type of practice raises ethical questions and undermines consumer and investor trust in the tech sector. It becomes essential for companies to demonstrate transparency and honesty regarding the real use of artificial intelligence in their products. Regulators and consumers must remain vigilant against these deviations to protect their interests.
What Lies Ahead for Artificial Intelligence?
The Builder.ai affair has had profound repercussions on the perception of artificial intelligence and trust in tech companies. As AI continues to transform numerous sectors, it is crucial for industry players to adopt ethical and transparent practices. Investors, in turn, must exercise due diligence to ensure the authenticity of the innovations presented.
The question of AI ethics is becoming increasingly central, and it is imperative to establish clear standards to prevent abuses. As the Builder.ai scandal continues to make waves, what measures will be taken to ensure responsible and transparent use of artificial intelligence in the future?
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