The artificial intelligence startup Builder.ai, which declared bankruptcy at the end of May 2025, has been revealed as a participant in a large-scale scheme to mislead investors. It has come to light that the company, along with Indian firm VerSe Innovation, had been simulating financial activity for several years to create the illusion of stable business growth.
This is reported by Business • Media
The “Round-Tripping” Scheme and Fraud Suspicions
According to internal documentation obtained by one of the leading global publications, from 2021 to 2024, Builder.ai and VerSe Innovation regularly transferred funds to each other in similar amounts, recording them as sales. This scheme is known as round-tripping. Its essence lies in creating artificial trading volume between two parties to inflate the company’s financial metrics on paper.
Such manipulations allowed Builder.ai to demonstrate revenue growth and a strong position to attract new investments. However, VerSe Innovation co-founder Umang Bedi categorically denied any involvement in such actions in a comment to journalists:
“We are not the kind of company that inflates revenues.”
Reporting Issues and the Role of Contractors in the AI Assistant’s Operations
Recently, Builder.ai has been at the center of scandals. In February 2025, the company conducted a massive staff reduction, and key executives, including CEO Sachin Dev Duggal and CFO Varghese Cherian, left their positions. Following this, external auditors were brought in to verify the accuracy of financial reports from the past two years.
Another cause for suspicion was the effectiveness of Builder.ai’s AI assistant. Investigations revealed that a significant portion of the tasks attributed to the artificial intelligence was actually performed by contractors from Eastern Europe and India. This significantly undervalues the actual technological worth of the company’s product.
Builder.ai attracted investor attention, raising around $450 million and receiving a valuation of over $1 billion, which granted it “unicorn” status. However, the startup’s bankruptcy has become yet another example of potential financial fraud in the artificial intelligence sector. Similar accusations have previously been made against other companies in this segment.