SEC 'AI-washing' enforcement: Rimar Capital and owner Itai Liptz pay $310,000 for an AI trading platform that didn't exist

What happened

AI washing — marketing an AI capability a firm does not actually have — drew a securities regulator on 10 October 2024. The SEC announced settled charges against Rimar Capital USA, Inc., Rimar Capital, LLC, owner and CEO Itai Liptz, and Rimar USA board member Clifford Boro “for making false and misleading statements about Rimar LLC’s purported use of artificial intelligence, or AI, to perform automated trading for client accounts and numerous other material misrepresentations” (source) [Source 1, Tier 1]. The regulator’s Office of Distributions records that the firm marketed “an adviser that purported to use artificial intelligence to perform automated trading for advisory client accounts in a range of products including equities, futures, and crypto assets” (source) [Source 2, Tier 1].

What was actually built

Less than advertised. The SEC found Rimar LLC “was falsely described as having an AI-driven platform for trading securities” (source) [Source 1, Tier 1]. A Debevoise & Plimpton memo summarising the Order puts it plainly: the marketing “repeatedly referred to Rimar LLC as having an artificial intelligence-driven platform for trading stock and crypto assets, among other products, despite having no such trading application” (source) [Source 3, Tier 2]. On the strength of these and related misrepresentations about the platform’s features, assets under management and performance, the respondents “raised nearly $4 million from 45 investors” between May 2022 and April 2023 (source) [Source 2, Tier 1]; the SEC also found Liptz “improperly used some of the sale proceeds for personal purposes” (source) [Source 2, Tier 1].

The outcome

The parties settled without admitting or denying the findings. Announcing the action, the SEC stated “the parties agreed to settle the SEC’s charges and pay $310,000 in total civil penalties” (source) [Source 1, Tier 1]. The split: Liptz “consented to pay disgorgement and prejudgment interest totaling $213,611, to pay a $250,000 civil penalty, and to be subject to an investment company prohibition and associational bar with the right to reapply in five years. Boro agreed to pay a $60,000 civil penalty. Rimar LLC consented to be censured” (source) [Source 1, Tier 1] ($250,000 + $60,000 = $310,000; the arithmetic sums exactly). The distributions Order itemises the disgorgement precisely: “$202,604.00 in disgorgement plus prejudgment interest of $11,007.25 for a total of $213,611.25 … deemed satisfied by offsets recorded in July 2024” (source) [Source 2, Tier 1]. Andrew Dean, Co-Chief of the SEC’s Asset Management Unit, framed it on the record: “Through entities he controlled, Liptz lured investors and clients with multiple fabrications, including with buzzwords about the latest AI technology” (source) [Source 1, Tier 1]. An independent newsroom reported the same figures firsthand: Cointelegraph recorded that “Rimar Capital, Rimar Capital USA, their CEO Itai Liptz and Rimar USA board member Clifford Boro together paid a $310,000 civil penalty to settle fraud-related charges,” with Liptz paying “disgorgement and prejudgment interest totaling $213,600 in addition to the $250,000 civil penalty and a five-year ban from the industry” (source) [Source 4, Tier 2].

The penalties did not simply vanish into the Treasury. The SEC “created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties collected can be distributed to harmed investors,” and on 13 March 2025 appointed a Tax Administrator for it (source) [Source 2, Tier 1].

Weakest link (source honesty)

The two turning-point facts — the $310,000 penalty settlement and the finding that the advertised AI platform did not exist — each rest first on the SEC’s own record: the press release (Source 1) and the Office of Distributions Order page (Source 2), two distinct Tier-1 regulator artifacts. The weakest load-bearing corroborating source is the Debevoise & Plimpton memo [Source 3]: it is a law-firm client alert (republished by the Harvard Law School Forum on Corporate Governance), not an independent newsroom, so it is treated as strong secondary (Tier 2), not primary. It corroborates the Order it summarises and supplies the one figure the SEC release rounds — the exact “$3.725 million” raised, versus the release’s “nearly $4 million.” The two turning-point figures are now also corroborated by an independent newsroom, Cointelegraph [Source 4], which reported the $310,000 penalty and Liptz’s $250,000 civil penalty firsthand; note it rounds the related figures ($213,600 for disgorgement-plus-interest against the SEC’s exact $213,611.25, and $3.73 million raised against the Debevoise memo’s $3.725 million), so on those two numbers the SEC record remains the precise source. With two distinct SEC artifacts plus two independent secondaries, the $310,000 and $250,000 figures are independently confirmed.

How this was verified

Method: Two Tier-1 SEC artifacts — press release 2024-167 (10 October 2024) and the SEC Office of Distributions Fair-Fund page for Admin. Proc. File No. 3-22236 (Order Release No. 33-11316) — were fetched live this session through the Wayback Machine’s raw captures (sec.gov blocks direct automated fetch, so the archived capture is both the retrieval and the archive) and each quoted line was checked against the stored capture. Two independent secondaries were captured: the Debevoise memo via its Harvard Law School Forum republication, and Cointelegraph’s 11 October 2024 report, fetched live and archived to the Wayback Machine (capture 20260823214618) this session. Date: 23 August 2026. This is a documentary honest-negative — a public regulator’s enforcement record, not a client outcome — and it never carries a green client badge.

Related case files

• SEC “AI-washing” — Delphia and Global Predictions, $400k penalties — the SEC’s first AI-marketing enforcement actions, six months before Rimar, on the same antifraud theory.
• SEC “AI-washing” — Presto Automation cease-and-desist — a parallel SEC action policing an overstated automated-AI claim, where the work was in fact done by humans.
• FTC v. Workado — “98% accurate” AI detector was 53% — a different U.S. regulator holding an AI vendor to the accuracy it advertised.

Sources

1. U.S. Securities and Exchange Commission · SEC Charges Rimar Capital Entities and Owner Itai Liptz for Defrauding Investors by Making False and Misleading Statements About Use of Artificial Intelligence (Press Release 2024-167) · 10 October 2024 · Tier 1 · https://www.sec.gov/newsroom/press-releases/2024-167
2. U.S. Securities and Exchange Commission, Office of Distributions · In the Matter of Rimar Capital USA, Inc., et al. (Admin. Proc. File No. 3-22236; Order Release No. 33-11316) — Harmed Investor / Fair Fund page · last updated 17 June 2025 · Tier 1 · https://www.sec.gov/enforcement-litigation/distributions-harmed-investors/rimar-capital-usa-inc-rimar-capital-llc-itai-royi-liptz-clifford-todd-boro
3. Benjamin R. Pedersen, Charu Chandrasekhar & Anna Moody (Debevoise & Plimpton LLP), via the Harvard Law School Forum on Corporate Governance · SEC Settles Charges for Defrauding Investors in “AI Washing” Scheme · 22 October 2024 · Tier 2 · https://corpgov.law.harvard.edu/2024/10/22/sec-settles-charges-for-defrauding-investors-in-ai-washing-scheme/
4. Cointelegraph · SEC settles with trading firm in $4M ‘AI-washing’ scheme · 11 October 2024 · Tier 2 · https://cointelegraph.com/news/sec-settles-charges-alleged-ai-washing-trading-firm