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The Collapse of Builder.ai Reveals How the Obsession with Artificial Intelligence Became Bait for Billion-Dollar Frauds — and No One Is Immune
A British company claimed to use artificial intelligence to magically create apps, but behind the facade, there were 700 programmers typing manually. Microsoft and Qatari investors were deceived.
An Empire Built on Code… Human
The promise seemed irresistible: creating an app would be as simple as ordering a pizza. This was the message that Builder.ai spread far and wide, selling its platform as a revolution in how software is developed, powered by artificial intelligence. The star of the service was Natasha, a virtual assistant who was supposedly able to transform ideas into complete apps in just a few days.
Founded in London in 2016 by Sachin Dev Duggal, the company quickly became a phenomenon. With a no-code development proposal and a futuristic look, it attracted significant investments. Microsoft and the Qatar Investment Authority put money into the business, which was once valued at US$ 1.5 billion — about R$ 8 billion at current exchange rates.
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But the farce did not last forever. On May 20, 2025, Builder.ai filed for bankruptcy. The reason? A devastating combination of accounting manipulation and a central lie: the company’s artificial intelligence never existed. Everything was done by an army of over 700 engineers in India.
The Lie Behind the AI: Natasha Never Existed
What investors and customers saw was a charming virtual assistant, capable of assembling apps like Lego blocks. What was really happening was a passing of the tasks to offices in India, where human developers manually completed each stage of the project.
Even the simplest functions — such as pricing, deadlines, or organizing stages — were not performed by any intelligent system. Instead, traditional software and spreadsheets handled the operations while marketing sold an AI that never existed.
This was not due to a lack of warning. As early as 2019, an article from the Wall Street Journal raised suspicions about the platform’s operations. According to the newspaper, the process was highly manual and the products delivered often had low quality, poor structure, and difficult maintenance.
Former director Robert Holdheim, who was fired after questioning the model, stated that “the technology did not work as promoted and was essentially an illusion.” Other directors who questioned the model were also dismissed, which only heightened suspicion.
Trail of Debts, Fraud, and Money Laundering
The company’s real collapse began to take shape in 2024 when the Israeli firm Viola Credit, which had lent US$ 50 million to Builder.ai, decided to withhold US$ 37 million after identifying financial irregularities. At the same time, the Indian government froze other assets of the company over suspicions of money laundering and accounting fraud.
Investigations indicated that Builder.ai inflated revenues with fake contracts signed with the Indian company VerSe Innovations. Estimates suggest that the reported earnings were overestimated by up to 300% to attract investor attention. The company claimed to generate US$ 220 million annually, but in reality, it was only about US$ 50 million, with debts exceeding US$ 115 million.
This Was Not an Isolated Case — and It Sparks a Global Alarm
The scandal exposes an open wound in the startup ecosystem: the ease with which seductive tech narratives, especially about AI, can raise large sums of capital without rigorous technical validation.
This is not the first case. The startup Nate, for example, also claimed to use artificial intelligence for automated online shopping, but was exposed: everything was done by humans in the Philippines. Like Builder.ai, it sold illusion packaged as cutting-edge technology.
The lesson is clear: as the race for artificial intelligence accelerates, it is urgent for investors, governments, and even consumers to adopt a more critical and technical stance toward fantastic promises. As the Builder.ai case shows, not all that glitters comes from silicon — sometimes, it is just a facade.
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