Microsoft-Backed AI Startup Builder.ai Files for Bankruptcy Amid Fraud Allegations
2025-06-03
Builder.ai, a once high-flying AI startup backed by Microsoft and valued at $1.5 billion, has filed for bankruptcy. The company's claims of AI-powered app building, facilitated by a virtual assistant named 'Natasha,' were revealed to be a massive fraud. Nearly 700 engineers in India were manually coding customer requests, exposing inflated revenue projections and misleading investors. The collapse has triggered a federal investigation and highlights the growing problem of 'AI washing,' where manual services are deceptively presented as AI-driven to attract funding.
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