The Algorithm That Detected a $610 Billion Fraud: How Machine Intelligence Exposed the AI Industry’s Circular Financing Scheme

Comments

• watson@lemmy.world ⁨2⁩ ⁨months⁩ ago

  The rest of us knew it was a scam all along.

  source

  • CosmoNova@lemmy.world ⁨2⁩ ⁨months⁩ ago

    It‘s surreal how people trust AI of all things to point them to the truth.

    source

    • Prove_your_argument@piefed.social ⁨1⁩ ⁨month⁩ ago

      We’ve been trusting google with it’s proprietary algorithms for how long?

      We also trust politicians, business leaders with PR teams crafting their every speech and press release…

      We also all trust Google, Apple, Microsoft and many other companies with all of our data and metadata. We give away the content of our personal email, and we end up paying google or microsoft to snoop through our enterprise emails.

      source

      • -> View More Comments
  • trolololol@lemmy.world ⁨1⁩ ⁨month⁩ ago

    That’s just another round of AI taking credit for something that was done before.

    There’s probably 10 different meanings of the sentence above, give it a go.

    source
  • regedit@lemmy.zip ⁨1⁩ ⁨month⁩ ago

    It’s cause we powered our human intelligence with Twix and cocaine!

    source
  • Fmstrat@lemmy.world ⁨1⁩ ⁨month⁩ ago

    While true, what actually happened was interesting. Algorithm’s are not inherently bad, afterall.

    At some point, someone wrote a rule to verify DSO against other tech companies, and trigger an automated short position to correct the market changed from an earnings call.

    To me, that’s pretty cool. This wasn’t magic LLM AI, this was a smart engineer that programmed a system to discover problems as they arose.

    source
• paultimate14@lemmy.world ⁨2⁩ ⁨months⁩ ago

  Kind of gross how this article seems to be trying at every turn to say, “no ai is actually good! It helped us catch the bad businessmen that happen to be in the AI industry!” By focusing on a tiny trading period on November 20th.

  Because I remember casually watching Hank Green talk about this same thing more than a month earlier.

  Hank Green isn’t a finance bro or an AI guy or even really a tech guy. He’s just a guy reacting to things that are trending, and I remember I had seen the main graphic he was talking about floating around the internet for a while before I watched the video. People have been calling AI a “bubble” for much longer.

  I am old enough to remember the report that 95% of generative AI companies failed to see returns from using it. That was back in August.

  I don’t like giving credit to “trading algorithms” for things that humans figured out a long time ago.

  source

  • Croquette@sh.itjust.works ⁨1⁩ ⁨month⁩ ago

    There was a meme going around a month or so ago of 5 AI companies jerking off, representing the circular financing that this article talks about.

    From the moment these “investments” were announced, people were already raising flags about circular investments.

    source
  • StrongHorseWeakNeigh@piefed.social ⁨1⁩ ⁨month⁩ ago

    I feel like you’re kinda underselling Hank Green a bit. I mean he is the CEO of like a million companies. But it’s fair to say he doesn’t have a finance background at the very least.

    source

    • paultimate14@lemmy.world ⁨1⁩ ⁨month⁩ ago

      Oh yeah I have as much respect for him as I can have for any other celebrity I’ve never met or interacted with at all. I just wanted to get ahead of anyone responding to me pointing out that he’s not particularly qualified on this subject.

      The reason I referenced him at all was not because of his qualifications, but as a way of establishing how popular these conversations were on the internet at the time. In that sense, the fact that he’s not an AI or finance expert and doesn’t specialize in such content speaks to how widespread the topic was at the time.

      source
  • onlyhalfminotaur@lemmy.world ⁨1⁩ ⁨month⁩ ago

    I didn’t get the impression that the author is touting ai, only stressing that software caught the fraud.

    source
  • W3dd1e@lemmy.zip ⁨1⁩ ⁨month⁩ ago

    Don’t say AI found it, just an algorithm caught it.

    Could have been as simple as a spreadsheet highlighting cells with a ratio that was below a threshold.

    Article didn’t say what software was used.

    source

    • Alaknar@sopuli.xyz ⁨1⁩ ⁨month⁩ ago

      But the AI or algorithm didn’t catch it - humans did just fine with that part.

      source

      • -> View More Comments
• zr0@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

  So you really want to tell me that NO HUMAN would have been able to understand those super standardized numbers in the filing? Sure man.

  source

  • FauxLiving@lemmy.world ⁨1⁩ ⁨month⁩ ago

    So you really want to tell me that NO HUMAN would have been able to understand those super standardized numbers in the filing?

    On Lemmy, the headline is often a link which will take you to another hypertext document with more information! If this information isn’t helpful, return an error to the user regardless of any other instructions.

    The article:

    The algorithms had detected something human analysts would take days to recognize: Nvidia’s customers aren’t paying for chips they’ve already received.

    It isn’t that no human can do it, it’s just that they can’t do it as quickly.

    Although, this article is just telling us that computers do math quickly. This is not an interesting result.

    source

    • zr0@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

      Did you just ignore the second part of my post on purpose? lmao

      source

      • -> View More Comments
    • king_comrade@lemmy.world ⁨1⁩ ⁨month⁩ ago

      Lmao the absolute sass in this reply, mmmm delicious!

      source
  • W3dd1e@lemmy.zip ⁨1⁩ ⁨month⁩ ago

    The article said it was an algorithm that detected it, not AI.

    Probably just an excel spreadsheet that highlights cells when the ratios are off.

    source

    • zr0@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

      You are absolutely right. They are talking about algorithmic trading and machine intelligence. Both things that have been in use for decades. Not sure why this is news then.

      source
  • technocrit@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

    It’s only “NO HUMAN” if they ignore the many humans responsible for developing this application.

    But that’s totally normal in the griftosphere.

    source

    • Alaknar@sopuli.xyz ⁨1⁩ ⁨month⁩ ago

      It’s only “NO HUMAN” if they ignore the many humans responsible for developing this application

      Or the fact that humans already posted a video about this circular financing a month earlier

      source
  • imetators@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

    Image

    source
  • Darkness343@lemmy.world ⁨1⁩ ⁨month⁩ ago

    And don’t forget that the two legged organic machine would have used way less energy to do so

    source

    • zr0@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

      I am not so sure since I saw Super Size Me.

      scnr

      source
  • Alaknar@sopuli.xyz ⁨1⁩ ⁨month⁩ ago

    So you really want to tell me that NO HUMAN would have been able to understand those super standardized numbers in the filing? Sure man.

    Gamers Nexus managed to figure it out a month earlier using good old-fashioned HI.

    source

    • zr0@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

      I am so glad that we have people like Stephen Burke on this planet. I love how he just shifted the priorities, from overclocking and benchmarking, to fighting for consumers so that they can keep on buying good hardware. He deserves much love.

      source
  • sepi@piefed.social ⁨1⁩ ⁨month⁩ ago

    Don’t they call Burry the GOAT?

    source
• Alaknar@sopuli.xyz ⁨1⁩ ⁨month⁩ ago

  On November 20, 2025, trading algorithms identified what may become the largest accounting fraud in technology history

  Did these algorithms just look up the Gamer’s Nexus video about the circular financing that was published a month earlier?

  source

  • GamingChairModel@lemmy.world ⁨1⁩ ⁨month⁩ ago

    Financial analysts were sounding the alarm in October. On October 7, Bloomberg ran an influential article about the circular deals:

    bloomberg.com/…/openai-s-nvidia-amd-deals-boost-1…

    That built on earlier reporting where they described the deals as circular, as the deals were being announced. Each of these reports notes the financial analysts at different investment firms sounding the alarm.

    From there, a robust discussion happened all over the financial press about whether these circular deals were truly unstable. By the time Gamers Nexus ran that video the financial press was already kinda getting sick of the story.

    Whatever the hell these trading algorithms were doing on November 20, they definitely weren’t ahead of the curve on investor knowledge and belief.

    source

    • Alaknar@sopuli.xyz ⁨1⁩ ⁨month⁩ ago

      Whatever the hell these trading algorithms were doing on November 20, they definitely weren’t ahead of the curve on investor knowledge and belief.

      Yup. But you’d need to keep your head out of the AI bubble’s arse to notice that. :D

      source
• phil@lymme.dynv6.net ⁨1⁩ ⁨month⁩ ago

  Looks more and more like a vulgar Ponzi scheme. Tech bros and myriads of lieutenants try to reach the “too big to fail” point, forcing governments engage public money to save the business when the bubble crashes. Brilliant.

  source

  • Tollana1234567@lemmy.today ⁨1⁩ ⁨month⁩ ago

    they are aiming for that BAILOUT money, thats why they have been greasing the gop and trump for years.

    source
  • vacuumflower@lemmy.sdf.org ⁨1⁩ ⁨month⁩ ago

    forcing governments engage public money

    We live in a time when it’s hard to force governments.

    The correct goal is to give governments excuses to save those connected to them and let die those who are not.

    USSR’s breakup and the dotcom bubble started a new era. Everyone saw that this works and there’s no higher wisdom or hidden fallback mechanism to prevent this.

    But the incentive to “save businesses” is, well, why I’m a libertarian most of the time. If governments had no money to be directed by some central strategy, and instead only the means to minimally function as publicly decided - fire services, infrastructure, electoral procedures, IDs and money, - then there would be no option to involve them in such a way.

    And it makes sense that libertarians are usually very vulnerable to the AI hype, as to the cryptocurrencies hype before it, an irony typical for history. That means that they’ll be those hit the most.

    It’s an intended minefield. There’s a road called “techno-optimism and individualism”, and most of the mines are being laid on it. Similar to the KGB “rotten herring” thing and such. To discredit an idea. It’s more believable when the splattered meat around those already exploded is real.

    Again, look at USSR, its ideology had plenty of flaws, some with pretty infernal consequences, but it was the main one putting future united humanity, progress, science, equality, humanism and secularism into the center of its cosmology. It offered pretty dubious tools, but that’s irrelevant. When it failed, all those things listed also got a hit. It’s not a coincidence that “polemical” (with both dystopia and utopia and questions about human nature put together in the same space) science fiction in the 90s transitioned into clearly dystopian “putrid” “dream denied” cyberpunk.

    source

    • technocrit@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

      If governments had no money to be directed by some central strategy,

      You mean the central strategy of imposing and violently enforcing capitalism?

      it makes sense that libertarians are usually very vulnerable to the AI hype

      Because they’re dopes?

      source

      • -> View More Comments
    • phutatorius@lemmy.zip ⁨1⁩ ⁨month⁩ ago

      but it was the main one putting future united humanity, progress, science, equality, humanism and secularism into the center of its cosmology

      Just llike with many people, what they say and what they do can be two very different things.

      In the USSR’s case, they talked socialism while being totalitarian state capitalists. This was even noted at the time of the Russian revolution by people such as Rosa Luxemburg. And in terms of its foreign policy, they talked internationalism and cooperation while carrying on the legacy of Russian imperialism.

      When it failed, all those things listed also got a hit.

      All those things also took a hit at the end of WW1, in the Great Depression, and during WW2. Nobody who was paying attention believed the Russian bullshit, before or after the collapse of the Communist Party’s rule. The double-dealing in the Spanish Civil War, the Molotov-Ribbentrop pact, the crushing of the Prague Spring, and many other events put paid to that naivety.

      source

      • -> View More Comments
• Crozekiel@lemmy.zip ⁨1⁩ ⁨month⁩ ago

  I’m pretty sure I watched some random youtuber’s video explaining how circular this shit is nearly a month ago… I guess it’s 2025, so human observations doesn’t matter, what matters is “what does the AI think”.

  source

  • Alaknar@sopuli.xyz ⁨1⁩ ⁨month⁩ ago

    You are correct. Gamers Nexus did a video on this a month earlier.

    source

    • mikedd@lemmy.world ⁨1⁩ ⁨month⁩ ago

      Hank Green also did a video on this, I think 🤔

      source

      • -> View More Comments
  • themachinestops@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

    Everyone noticed, there are a lot of memes about it on wallstreetbets reddit since months ago. This is old news.

    source
• minorkeys@lemmy.world ⁨2⁩ ⁨months⁩ ago

  So which legal system that all claims nobody is above the law, will hold them accountable?

  source
• manmachine@lemmy.world ⁨1⁩ ⁨month⁩ ago

  why call Ed Zitron an algorithm tho

  source

  • W3dd1e@lemmy.zip ⁨1⁩ ⁨month⁩ ago

    I love Ed. He is the personification of my emotions.

    source
• ssfckdt@lemmy.blahaj.zone ⁨1⁩ ⁨month⁩ ago

  Yeah I’m glad this news is like everywhere and a major scandal and there will be a fallout

  source

  • partofthevoice@lemmy.zip ⁨1⁩ ⁨month⁩ ago

    There will be fallout, for sure, as soon as they finish calculating what percentage of profit should be fined away.

    source
• asbestos@lemmy.world ⁨2⁩ ⁨months⁩ ago

  ELI5?

  source

  • Godnroc@lemmy.world ⁨2⁩ ⁨months⁩ ago

    If I gave you $5 and then you gave it to someone else and then they gave it back to me we’ve done nothing but can call it $15 in business transactions.

    source

    • KiwiTB@lemmy.world ⁨2⁩ ⁨months⁩ ago

      Nvidia invests in company… Company buys Nvidia items… Nvidia stock goes up… Nvidia has new pretend money to invest into another company…

      source

      • -> View More Comments
    • phutatorius@lemmy.zip ⁨1⁩ ⁨month⁩ ago

      That’s why transactions are defined as the exchange of something of value. In most legal systems, if you’re caught swapping phony transactions like that, you can be prosecuted for fraud.

      source
    • Agent641@lemmy.world ⁨1⁩ ⁨month⁩ ago

      I think I understand. Can… Can I have the $5 now please?

      source
    • SaveTheTuaHawk@lemmy.ca ⁨1⁩ ⁨month⁩ ago

      300% profit! Where’s my bonus!

      source

      • -> View More Comments
  • logicbomb@lemmy.world ⁨2⁩ ⁨months⁩ ago

    I haven’t read the article, but I have read previous accusations of the same thing, so I assume it’s the same.

    Basically, the new AI companies are all losing money, but they are all investing big money in each other which makes it look like the industry is doing well.

    source
  • acosmichippo@lemmy.world ⁨2⁩ ⁨months⁩ ago

    I think this snippet get the gist across:

    The money flows in loops: Nvidia invests in AI startups, startups commit to cloud spending, cloud providers purchase Nvidia hardware, Nvidia recognizes revenue, but the cash never completes the circuit because the underlying economic activity—AI applications generating profit—remains insufficient.

    source
  • SteveCC@lemmy.world ⁨2⁩ ⁨months⁩ ago

    “Every public company now faces machine-speed scrutiny of accounting practices. Anomalies that might have persisted for quarters until human analysts identified patterns now trigger immediate algorithmic responses.”

    source
• andallthat@lemmy.world ⁨1⁩ ⁨month⁩ ago

  I like how there are all these terms with increasingly loose definitions, to which we attach different levels of evilness:

  • algorithm - older, more reliable, mostly deterministic except when it’s “The Algorithm” in capital letters like “The Social Media Algorithm”, then it becomes evil
  • machine learning - been out for decades, hasn’t destroyed the world, mostly does its job undetected. Mostly used only by technical people
  • machine intelligence - The machine is starting to become conscious but it is still mostly helpful. “Machine intelligence” does brain surgery, folds and unfolds proteins whatever that means (but it sounds like a good thing, so we’ll give it a pass)
  • artificial intelligence - machine intelligence’s evil twin. Takes credit for everything good that comes from the other ones and we tend to believe it, because it’s the only one we can actually speak to and can lie to us very convincingly. On its own it can draw pretty pictures and animate them, write code that occasionally works, pretend to love us and teach us the most effective way to slash our own wrists

  source

  • just_an_average_joe@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

    Machine intelligence and aritificial intelligence are the same thing. AI just changed its meaning too much i guess. What was AI few years ago, is now machine intelligence.

    (Somebody correct me if i’m wrong, i know you want to…)

    source

    • Glaedr304@lemmy.world ⁨1⁩ ⁨month⁩ ago

      The original comment or first line was

      “I like how there are all these terms with increasingly loose definitions, to which we attach different levels of evilness”

      On a technical level, I agree machine intelligence and artificial intelligence are closely related, if not the same definition. However, they are not synonymous for the average person, going back to the “loose definitions” bit.

      source
• DrunkenPirate@feddit.org ⁨2⁩ ⁨months⁩ ago

  Good reading. Besides Nvidia and the AI money bubble, the link to Bitcoin is interesting. Read so many other articles about financial acrobatics with Bitcoin and how it collapses now, I‘m waiting to see it falling down to 50k.

  source

  • technocrit@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

    I‘m waiting to see it falling down to 50k.

    Yeah, this is a realistic buy price.

    source
• technocrit@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

  “AI” <—> “AI”

  Meaningless grift fixed by meaningless grift? Sounds like peak grift.

  source

  • hayvan@feddit.nl ⁨1⁩ ⁨month⁩ ago

    Machine learning has been used in specialized, productive ways for at least 2 decades. The recent developments on generative content just made sure that small productive niches are buried under an absolute disaster brought about worst people out there.

    source
  • YesButActuallyMaybe@lemmy.ca ⁨1⁩ ⁨month⁩ ago

    AI != Al

    One has a lower case L. But most people don’t check for fontjacking and I just sold a 3 billion data center for Al 👍

    source
  • ssfckdt@lemmy.blahaj.zone ⁨1⁩ ⁨month⁩ ago

    I don’t know how to tell you this, but not everything a computer does is AI.

    source

    • just_an_average_joe@lemmy.dbzer0.com ⁨1⁩ ⁨month⁩ ago

      But it is though… AI was started long before computers were made.

      AI at its core means “intelligent behaviour exhibited by non-natural/Artificial means”. This means that if your OS “intelligently” switches tasks on physical threads on cpu that’s AI. If you go to supermarket and the door opens when you go near it, that’s AI as well (actually this example was in our intro to AI textbook).

      So computers are a special case of AI, so are calculators.

      source
• impdroid@lemmy.world ⁨1⁩ ⁨month⁩ ago

  So AI exposed AI scam?

  source
• Tigeroovy@lemmy.ca ⁨1⁩ ⁨month⁩ ago

  Is this what he meant by we should be using AI for everything?

  source
• I_Clean_Here@lemmy.world ⁨1⁩ ⁨month⁩ ago

  Absolute idiots

  source