Man Pleads Guilty in First US AI Streaming Fraud Case

A 54-year-old man from Cornelius, North Carolina, pleaded guilty in federal court in New York on Thursday to orchestrating a multimillion-dollar music streaming fraud scheme that relied on artificial intelligence and bot networks, marking the first criminal prosecution of its kind in the United States.

Michael Smith entered the plea to one count of conspiracy to commit wire fraud before U.S. District Judge John G. Koeltl in the Southern District of New York. Prosecutors said Smith generated hundreds of thousands of fake songs using AI tools starting in late 2018 and deployed thousands of automated bot accounts to stream them billions of times across platforms including Spotify, Apple Music, Amazon Music, and YouTube Music. The operation, which began in 2017 with streams of his own limited catalog of human-created music, diverted more than $8 million in royalties from legitimate artists and rights holders by inflating play counts and siphoning funds from the shared royalty pools that streaming services use to compensate creators based on total streams.

By distributing the artificial activity across thousands of accounts and a vast library of AI-generated tracks, Smith evaded...