Builder AI launches liquidation process in Delaware after controversy over sales overestimation, Nate founder’s federal indictment, GameOn false data, etc
While the generative artificial intelligence (AI) craze is approaching its peak, promises that “AI will do everything on its own” are collapsing throughout Silicon Valley. The bankruptcy of Builder AI, which was revered as a unicorn, is a symbolic event.
According to the New York Times on the 31st (local time), Builder AI has launched a massive promotion with high growth in 2024, but a board investigation has confirmed overstatement of sales. After management changes and a liquidity crisis, the company entered liquidation proceedings in Delaware courts in the first half of 2025. As suspicions spread that “people took care of it from behind” over the reality of AI manager Natasha, who said he would automatically make the app, management explained, “AI was an auxiliary tool and did not replace people,” but failed to restore trust.
The incident shows how easily verification of the actual level of automation of technology and financial numbers can be pushed back while the label ‘AI’ draws the attention of investment and media.
Similar scenes were repeated on other stages. The shopping app “Nate” promoted that “Deep Learning replaces payment and checkout,” but allegations arose that the Philippine outsourcing staff handled the order manually. Eventually, the Southern New York Federal Prosecutor’s Office (SDNY) charged its founder with investor fraud in the spring of 2025.
San Francisco startup “Game On” put forward an AI sports chatbot, but was indicted on false financial data, fake audit reports, and allegations of inflated sales. What these events have in common is that they promoted “AI-washing,” that is, processes that are largely performed by humans or low automation maturity, as if they were “completely automatic.”
‘AI done by humans’ is not small in the field of large corporations. Amazon’s “Just Walk Out” was a concept that sensors and computer vision handled automatic payments, but reports continued that personnel identified and inspected transactions in actual operations. Amazon denied the controversy over the exaggeration, but adjusted its store strategy to focus on smart carts.
Presto Automation, which introduced a fast-food drive-through automatic response solution, was also found to have processed a significant percentage of orders at a certain time. Legal technology start-up advocated automating personal injury case documents, but when internal testimony was reported that many of the actual tasks depend on human inspection, the company emphasized that “the combination of AI and humans is essential for high quality.”
“The fall of Builder AI clearly shows what to believe and what to doubt in the current AI boom,” the New York Times said. “As it is said that AI is sold, but automation is not, the gap between the actual level of technology and market expectations is still large.”
