FTC Shuts Down Growth Cave in $48.6 Million "AI-Washing" and Business Opportunity Scheme Settlement
On January 27, 2026, the Federal Trade Commission (FTC) finalized a landmark settlement banning the operators of "Growth Cave"—including co-CEOs Lucas Lee-Tyson and Osmany Batte, and related entities—from marketing or selling business opportunities and credit repair programs. The settlement resolves a February 2025 FTC lawsuit (FTC v. Growth Cave, LLC, et al., Case No. 2:25-cv-01115 in the Central District of California) alleging the defendants ran a deceptive scheme that defrauded consumers of nearly $50 million.
Central to the deception was "AI-washing": Growth Cave marketed an "AI software" tool called "GrowthBox" (and "PassiveApps") that promised to "automate nearly 100% of the process" of establishing and running an online education course. In reality, the technology was not automated or AI-driven; it required users to perform intensive manual workflows, such as manually uploading advertisements, setting appointments, and inputting marketing messages.
The final stipulated orders impose a $48,597,538 judgment against the defendants, which is partially suspended based on their inability to pay. To satisfy the consumer redress obligations, Lee-Tyson is required to liquidate his bank accounts, investments, and a multimillion-dollar home, while Batte must liquidate luxury vehicles, including a Rolls-Royce and a Ferrari. In addition, the orders ban the defendants from making misleading representations regarding earnings, customer testimonials, and their use of artificial intelligence.
"Both orders announced today contain similar conduct provisions, banning the defendants from selling and marketing—or assisting others in selling or marketing—business opportunities and from engaging in credit repair activities. They also prohibit the defendants from making misleading representations related to earnings claims, testimonials, and the use of artificial intelligence." — FTC Press Release
"In Growth Cave, among other allegations, the complaint asserted that the company misrepresented to consumers that its “AI software,” GrowthBox, would “automate nearly 100% of the process” of setting up and operating an online education course. According to the FTC, the technology instead “requires users to manually upload their advertisements, set appointments, and input messages that can be sent out to potential customers via text message and email.”" — DLA Piper Legal Alert