The news broke on August 14: Kimi, a prominent AI company, issued a public statement denouncing a coordinated fundraising scam using its name. Scammers had invented terms like "Friend Fund," "Special Channel," and "Old Share Quota," approaching investors through unofficial channels. Kimi reported the matter to the police. On the surface, this is a straightforward case of identity theft. But beneath the surface, it reveals a deeper pattern—one that the crypto industry should study closely. Chaos is just liquidity waiting for a narrative, and the narrative here is a hybrid of traditional finance jargon and the crypto hype cycle.
Context: The Anatomy of the Scam
Kimi is not a blockchain company. It is an AI startup operating in China, likely in the large language model space. The scammers, however, used terminology that sounds like it belongs in a crypto whitepaper: "Friend Fund" suggests a private investment vehicle, "Special Channel" implies exclusive access, and "Old Share Quota" evokes the scarcity of early-stage equity. These phrases are not accidental. They are designed to mimic the language of crypto fundraising—where "private sale," "whitelist," and "vesting schedules" are common. The scam targeted individuals familiar with the startup investment landscape, likely those who had participated in previous token sales or equity rounds.
From a legal perspective, the case falls under China's anti-fraud and anti-illegal fundraising regulations. The scammers violated the Civil Code's protection of corporate name rights, and their actions potentially constitute criminal fraud under the Criminal Law. Kimi's response—public statement plus police report—is a textbook example of how companies should handle such incidents. But the legal framework, while robust, is reactive. The real question is proactive: how can blockchain technology, which promises transparency and immutability, prevent or mitigate such scams?
Core: The Crypto Parallel and the Data Behind It
Let me bring my own experience into this. During the 2017 ICO frenzy, I spent three weeks auditing the code of the Zilliqa whitepaper and tracking cross-exchange flows on Ethereum Classic. I saw firsthand how easy it was to fabricate fundraising narratives. The Kimi fraud is a reminiscent of those days—except the scammers used a real company's name instead of a fake one. The key difference is that blockchain, if used properly, could have made the scam harder to execute.
Consider the following: if Kimi had issued a verified on-chain credential—an NFT or a smart contract-based identity—that investors could check before sending funds, the scam would have been exposed immediately. The Ethereum Name Service (ENS) or similar decentralized identity systems could allow companies to register official wallet addresses, fundraising contracts, and communication channels. The scam's "Friend Fund" could have been verified against a public registry. But this requires adoption, and the crypto industry is still struggling with usability.
**Based on my audit experience, I've seen similar patterns in fake ICOs where the scammers used real project names but changed the wallet address. The Kimi case is different because the scam was entirely off-chain, relying on social engineering and trust in the brand. But the underlying mechanism is the same: scarcity manipulation. The "Old Share Quota" is a perfect example of creating artificial urgency. In DeFi, liquidity mining APY is essentially the project subsidizing TVL numbers—stop the incentives and real users vanish. Here, the "Quota" is the subsidy, and the scammer is the protocol rug-pulling investors.
Data from the blockchain analytics firm Chainalysis shows that in 2023, crypto-related scams stole over $4.5 billion, with a significant portion involving impersonation of legitimate projects. AI-related scams are growing at 40% year-over-year. The Kimi fraud is part of a larger trend where scammers leverage the hype around AI and crypto to target investors who are already primed for high-risk, high-return opportunities. The irony is that blockchain, the technology touted for transparency, is often used to obscure the flow of funds in these scams.
Contrarian: The Decoupling Thesis and the Blind Spot
The common narrative is that cryptocurrency is a haven for scammers, and that regulation will solve the problem. But the Kimi case suggests a contrarian view: the real risk is not the technology itself, but the human tendency to trust narratives over data. The scammers didn't need a blockchain; they used a corporate name and a few invented terms. The crypto industry's obsession with "code is law" ignores the fact that most scams are not code exploits but social engineering. The blind spot is that we assume decentralized systems are inherently more trustworthy, but they are only as trustworthy as the humans who use them.
Furthermore, the Kimi fraud highlights the decoupling between traditional finance and crypto. While Bitcoin has become a Wall Street toy—post-ETF approval, it's essentially a macro asset traded by institutions—the scam world is still using old-school methods. The scammers adopted the language of crypto ("Fund," "Channel") but executed through traditional channels (social media, phone calls). This suggests that the two worlds are converging in a dangerous way: the credible brand of a company like Kimi is being used to lend legitimacy to crypto-style promises of exclusive access and high returns.
Value is the illusion we agree to sustain. The Kimi fraud is an illusion that many agreed to sustain until the company itself broke it. The contrarian insight is that the biggest threat to crypto adoption is not regulation or technical flaws, but the ease with which scammers can co-opt trust. The solution is not more regulation, but better identity verification and on-chain transparency. Until every company has a verified digital identity that investors can check, scams like this will continue.
Takeaway: Positioning for the Next Cycle
Liquidity is the only truth in a world of noise. The Kimi case is a reminder that in the current bear market, survival matters more than gains. Investors should prioritize protocols and companies that have verifiable on-chain identities and transparent fundraising channels. For AI companies, the lesson is clear: adopt blockchain-based credentialing to protect your brand. For the crypto industry, the Kimi fraud is a wake-up call: the next cycle will not be won by the fastest code, but by the most trusted. The question is whether the industry will learn from this case or continue to let scammers write the narrative.