Shocking Revelation in Tech Industry: A 1.5 Billion Dollar 'Fake AI' Exposed With 700 Real-Time Coders Operating From India

Sustainability Times

11-06-2025

IN A NUTSHELL 🔥 Builder.ai , a British startup, was exposed for using 700 engineers in India instead of advanced AI technology to code applications.
, a British startup, was exposed for using 700 engineers in India instead of advanced technology to code applications. 💰 The company raised over $480 million from investors like Microsoft, only to inflate revenue projections by 300% and face financial turmoil.
⚖️ Ongoing investigations include a UK insolvency process and a US federal probe, with founder Sachin Dev Duggal facing money laundering allegations in India.
🌐 The scandal highlights the widespread issue of 'AI washing' in the tech industry, where human labor is misrepresented as AI work.
In the fast-paced world of technology, the allure of artificial intelligence (AI) often promises to streamline processes and reduce human intervention. However, the story of Builder.ai, a British startup once valued at $1.5 billion, reveals a darker side to this narrative. The company, which claimed to revolutionize app development through AI, was found to rely heavily on manual coding by 700 engineers in India. As the facade crumbled, it became a cautionary tale of how technological advancements can sometimes mask traditional labor practices. This incident underscores the importance of transparency and ethical practices in the tech industry. The Illusion of Revolutionary AI
Builder.ai, led by founder Sachin Dev Duggal, captivated investors with the promise of making app creation as easy as ordering a pizza. The centerpiece of this promise was a virtual assistant named 'Natasha,' heralded as a groundbreaking AI capable of developing custom applications with minimal coding. However, beneath this innovative veneer, the reality was starkly different. Reports revealed that the so-called AI relied on the relentless work of 700 developers in India, who manually coded applications based on client requests. This labor-intensive process was cleverly hidden behind the guise of sophisticated AI technology, misleading investors and clients alike.
With financial backing from notable entities like Microsoft and the Qatar Investment Authority, Builder.ai successfully raised over $480 million. Yet, the company's house of cards began to tumble when the truth emerged. The reliance on human coders instead of advanced AI technologies exposed the firm to scrutiny and led to an investigation into its operational practices. This revelation not only shocked the tech community but also raised questions about the legitimacy of AI claims in the industry.
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The unraveling of Builder.ai's operations had severe financial repercussions. Viola Credit, an investor, withdrew $37 million from the company after discovering that projected revenues had been inflated by 300%. The startup's forecasted revenue of $220 million was a gross exaggeration, with audits revealing actual figures closer to $50 million. This misrepresentation led to a liquidity crisis, leaving the company with only $5 million in accessible funds, which were subsequently frozen due to legal restrictions.
The financial turmoil prompted Manpreet Ratia, appointed as president after the resignation of his predecessor, to file for bankruptcy. As the company navigates insolvency proceedings in the UK, US prosecutors have launched a federal investigation, demanding the company's financial records and client lists. Additionally, founder Sachin Dev Duggal faces allegations of money laundering in India, further complicating the legal landscape surrounding Builder.ai.
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The Builder.ai scandal is not an isolated incident. The practice of 'AI washing,' where companies attribute human work to AI, is becoming alarmingly common. Amazon faced a similar controversy with its 'Just Walk Out' technology, which involved over 1,000 human operators in India. Additionally, several accounting services, advertised as automated, were found to employ Filipino workers for manual tasks. This deceptive practice raises ethical concerns about the transparency and integrity of AI claims in the tech industry.
The repercussions of such practices extend beyond financial deceit. They affect the livelihoods of workers, particularly in regions where labor is outsourced. In Builder.ai's case, nearly 1,000 employees were laid off, and the platform 'Natasha' was discontinued. These events highlight the need for stringent regulations and accountability in AI development and deployment, ensuring that innovation does not come at the cost of ethical integrity.
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The collapse of Builder.ai serves as a wake-up call for the tech industry. It underscores the importance of due diligence and transparency in technological advancements. Investors and consumers must be vigilant and skeptical of grandiose AI claims, demanding evidence of authenticity and ethical practices. The tech community must foster an environment where innovation is not only celebrated but also accountable.
As AI continues to evolve, the industry must prioritize ethical guidelines and transparency to maintain trust and credibility. The Builder.ai incident is a stark reminder that behind every technological innovation, there must be a commitment to honesty and integrity. As we navigate the future of AI, how can the industry ensure that advancements are both groundbreaking and ethical?
Our author used artificial intelligence to enhance this article.
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