AI Sugarcoated – How Builder.ai Fooled Big Tech into the Biggest Tech Scam

The tech world always seems to crown a new darling, first it was the dot-com boom, then blockchain, and now the hottest star of them all is AI.

While some companies have rolled out genuine AI products that serve as helpful assistants, that’s not always the case. Just remember Amazon Go. Its “Just Walk Out” technology promised seamless, AI-powered shopping, but most transactions were manually reviewed by workers. Eventually, Amazon replaced it with self-checkout kiosks. This is proof that not all AI is as smart as it sounds.

Or have you ever heard that the SEC fined Delphia and Global Predictions a combined $400,000 for falsely claiming to use AI in their investment strategies? Both firms pitched themselves as cutting-edge, AI-driven financial advisors, but their actual practices didn’t match the hype.

While we can see AI-washing in cases like Amazon Go and misleading investment firms, those examples pale in comparison to what unfolded in 2025. No one, not even Big Tech was prepared for the largest AI scam. Yes, we are talking about Builder.ai.

Once valued at $1.5 billion and backed by giants like Microsoft and SoftBank, Builder.ai is now facing a downfall that shook the entire tech world. While 2025 was the year everything began to unravel, the scheme had been quietly running for years.

Everything Started with SD Squared Labs

In 2012, SD Squared Labs was founded by Sachin Dev Duggal and Saurabh Dhoot with a focus on helping startups manage cloud infrastructure more efficiently.

While Duggal is the most publicly visible figure associated with the company, the founding team collectively bootstrapped the venture and built it from the ground up, focusing on cloud solutions tailored for startups in emerging markets.

However, development shops rarely excite venture capitalists, they’re tough to scale and don’t fit the high-growth narrative investors crave. So, in 2016, the founders executed a savvy repositioning: they rebranded the service as Engineer.ai, framing it as an AI-powered platform to automate software development.

The Scheme Began with Engineer.ai

Engineer.ai was a London-based startup founded in 2016 by Sachin Dev Duggal and his friend Surabd. The company promised to make software development as simple as ordering a pizza, a comparison Duggal repeated in nearly every interview.

The platform was presented as a “build, run, and scale” solution for anyone with an idea, whether it was a small local shop or a growing brand. Customers were told that the company’s advanced artificial intelligence handled most of the development work, making the process fast and affordable. For people who had no experience in coding or deploying software, it seemed like the perfect answer.

Duggal knew that attracting large investors required more than just a catchy sales pitch, so he worked to make the story of Engineer.ai sound like the future of technology.

In its first two years, Duggal worked to make the company appear credible by streamlining the process into five simple steps: chat with the AI “Natasha,” receive a fixed price and timeline, meet a dedicated expert, have the AI assemble app features like Lego blocks, and let human specialists customize them for release.

The core offering was Builder Studio, promoted as a tool that could automatically assemble apps from reusable code with minimal human input, supported by Builder Cloud for hosting and cost control, and Studio One for ongoing maintenance—marketed as a complete, end-to-end solution from concept to launch.

Back when AI wasn’t yet a big thing, his promises of building apps quickly and automatically sounded almost unbelievable. He wasn’t trying to convince expert developers—instead, he wanted to impress customers and make the company look powerful. Once that image was set, the goal was to bring in big money from investors.

How Did Duggal Lure Softbank?

After attracting enough customers to make his company appear successful, Sachin Dev Duggal set his sights on SoftBank—the ultimate “big fish” in venture capital. SoftBank’s founder, Masayoshi Son, is famous for betting on bold, risky ideas based on gut instinct rather than cautious strategy. This approach has led to some massive wins but also notorious disasters like Wirecard and WeWork.

One thing about Son is he has always been drawn to futuristic technology.

Masayoshi Son doesn’t just invest in companies; he bets on the future like a sci-fi protagonist with a billion-dollar bankroll. His obsession with futuristic tech has led him to chase wild visions, from backing Alibaba after a five-minute meeting to pouring billions into AI ventures that sound like they were ripped from a cyberpunk novel.

Son sees artificial superintelligence not as a possibility, but as an inevitability, one that will be 10,000 times smarter than humans within a decade. That belief fuels audacious moves like the $500 billion Stargate Project and his stake in OpenAI, all part of his quest to build the digital gods of tomorrow.

This is exactly why Duggal set his sights on SoftBank. Duggal knew Son’s obsession with AI and tailored his pitch to feed that appetite—painting Builder.ai as a revolutionary, AI-powered app factory ready to reshape the industry. And Duggal was successful.

SoftBank bit, pouring $29.5 million into Builder.ai’s Series A round. The company flaunted “$24 million in revenue” and projected $100 million by the end of 2020, proudly name-dropping heavyweight clients like the BBC and Virgin.

One interesting thing in venture capital is that the magic word isn’t “revenue”—it’s “growth.” Duggal understood that momentum could outweigh stability, and he used that insight to craft a pitch SoftBank couldn’t resist. He made Builder.ai look like a rocket ship strapped together with explosive potential, even if some suspected the parts holding it together weren’t as sturdy as they appeared.

Fraud Exposed, Duggal Makes His Move – From Engineer.ai to Builder.ai

SoftBank’s investment gave Sachin Dev Duggal the one thing every startup founder desires most—credibility. Almost overnight, the company then known as Engineer.ai was riding a wave of hype. Inside the offices, the mood was electric. There were ambitious slogans painted on the walls, bold promises in investor presentations, and a culture that treated Duggal’s vision with near-religious devotion.

That confidence began to crumble when the spotlight turned. In 2019 The Wall Street Journal published an investigation questioning whether the company’s claims about AI-powered app creation were more fiction than fact. Former employees alleged that the technology’s capabilities had been greatly exaggerated to impress customers and investors.

The doubts grew when AI Business reported that the company’s stated network of engineers had jumped from 32,000 in late 2018 to 75,000 by mid 2019. This sudden explosion in manpower raised an obvious question. If the AI could automate 80 percent of the work, why was there a need for so many human coders

The media coverage began to paint a picture of a business driven more by illusion than innovation. As the criticism mounted, Duggal acted quickly. He removed the Engineer.ai name entirely and reintroduced the company to the world under a new identity called Builder.ai.

The rebrand to Builder.ai was meant to shake off controversy, but little changed behind the scenes. They kept making the same AI promises, chasing testimonials, and ignoring criticism, while projecting unstoppable growth. By 2023, they claimed $180 million in sales, over $400 million in funding from names like Microsoft and SoftBank, and a $1.5 billion valuation. The company was even considered as one of the most outstanding startups of this era.

Builder.ai Downfall – When the Illusion Fell Apart

Duggal kept doing what he always did—dressing sharp and selling grand visions of his AI—but fate had a very different plan in store.

In 2024, Robert Holdheim, a former executive at Builder.ai, filed a $5 million lawsuit against the company and its founder Sachin Dev Duggal. According to legal filings and multiple reports, Holdheim was allegedly dismissed after raising concerns about Builder.ai’s misleading claims regarding its automation and AI capabilities.

While damaging truths were quietly pushed aside, a far bigger storm was brewing.

By mid-2024, serious cracks began to show in Builder.ai’s corporate governance. The company had been operating without a Chief Financial Officer since July, relying instead on an external auditor with long-standing ties to founder Sachin Dev Duggal. This arrangement raised immediate concerns about conflicts of interest, especially as financial scrutiny intensified.

At the same time, Builder.ai quietly lowered its sales targets on its website, a move that went largely unnoticed by the public but signaled internal instability. Behind closed doors, clients were voicing dissatisfaction with the company’s development services, citing delays and inconsistent quality. Duggal, once a charismatic and visible figure in the tech world, had grown unusually quiet.

Despite the growing pressure, Duggal managed to maintain a polished public image. In November 2023—not 2024—he accepted the EY Entrepreneur of the Year UK award.

Privately, Builder.ai and Duggal were under investigation by Indian authorities for allegedly ignoring a 2022 summons tied to possible money laundering and foreign exchange violations. The case also implicated Videocon, an Indian conglomerate led by Duggal’s former business partner Saurabh Dhoot. Investigators accused Dhoot of using fraudulent bank loans to move funds between entities, some of which were allegedly linked to Builder.ai’s operations.

As the months passed, Builder.ai’s reputation began to corrode. The company had claimed $220 million in revenue for 2024, but independent audits revealed the actual figure was closer to $50 million—a staggering 300% inflation. According to reports, Builder.ai had engaged in round-tripping schemes, fabricating transactions to create the illusion of revenue without generating real economic value. This revelation shook investor confidence and triggered a wave of scrutiny.

The fallout was swift. Viola Credit, a major lender that had extended a $50 million loan, pulled out and seized $37 million from Builder.ai’s accounts. More losses and investigations followed. In February 2025, Duggal stepped down as CEO and was replaced by Manpreet Ratia.

Yet even after relinquishing his title, Duggal reportedly continued to roam the offices, introducing himself as “Chief Wizard,” a surreal gesture as the company he built teetered on the edge of collapse. By March 2025, Builder.ai had laid off 80% of its workforce and filed for bankruptcy in five countries, marking the dramatic end of one of the tech world’s most hyped AI startups.

The Knockout – “80% AI Automation”

When Manit Ratia stepped in to run Builder.ai, the myth unraveled almost instantly. The company had been parading around with claims of $220 million in 2024 revenue. The truth? Barely $50 million—and only $5 million in restricted funds left in the bank. Within weeks, operations ground to a halt, and nearly 1,000 employees were shown the door.

The rot ran deep. Investigators uncovered a web of revenue inflation tricks: tiny deposits dressed up as full sales, secret discounts never disclosed, and sham transactions ping-ponged through friendly intermediaries to fake business activity. A former insider described it as “an ocean of questionable practices.”

But the knockout blow came when Duggal’s crown jewel—the vaunted “80% AI automation”—was exposed as a complete fabrication. Behind the glossy pitch decks and flashy keynotes were more than 700 low-paid engineers, mostly in India, grinding through projects by hand. The whole operation was propped up by Versie, the same company implicated in the round-tripping fraud.

Bottom lines

Builder.ai had sold the world a fairy tale—promising effortless, AI-powered app creation that would change the game. In reality, it was one of the most brazen tech scams in recent history, built on inflated numbers, fake automation, money laundering, and the exploitation of low-paid human labor. Now the company is worthless, buried in debt.