A federal court denied Meta's Section 230 defense because its AI tools generated the fraudulent content, making the platform the author. The ruling exposes every ad platform with generative AI in the creative pipeline. A penny stock called China Liberal Education Holdings collapsed from $7.90 to $0.15 in a single trading day on January 30, 2025. The Department of Justice seized approximately $214 million in proceeds from the pump-and-dump scheme behind it. The fraud itself was unremarkable. What made it precedent-setting was the tool the fraudsters used to reach investors: Meta's own artificial intelligence. The perpetrators ran their scheme through Meta's AI-powered advertising suite. Advantage+ Creative, Dynamic Creative, and Flexible Format generated the images and ad copy that lured retail investors into CLEU. The ads were not merely hosted on Meta's platform. They were assembled, optimized, and produced by Meta's own software.…