It is not my field either except for amateur interest. My understanding is that because they are publicly disclosing it to investors, it's not fraud in the legal sense. Fraud requires deception. It could be that they do genuinely believe that their expertise in shoe selling translates to expertise in AI infra.

If you agree (or think that enough people will agree to increase the value of the stock), you can buy the shares. If you don't, you aren't forced to buy it - and as a penny stock with a market cap of $21MM, nobody's index fund or pension is going to be forced to buy it either.

The stock market sort of _is_ just karma farming - building belief in your company vision so that investors bring capital. Nearly all companies trade at a positive "P/E ratio" - that is, the price of a share is on average 10-20X higher than their current earnings - the difference representing pure belief that the company will earn more in the future.

The regulatory guardrails around it are not perfect, but striking the balance between allowing the public to participate in the growth of successful companies in a dynamic economy, and protecting them from scams, is a fine line. Being able to invest in publicly traded companies has made many middle class and working class people wealthy, the regulations do work for most people to keep them out of trouble while allowing them to participate. The people who get hurt are the ones who trade penny stocks like lottery tickets, which is less a regulatory failure and more the impulsive behavior that drives any kind of gambling.