The SEC has filed suit against Texas resident Nathan Fuller, accusing him of running a roughly $12.3 million crypto investment scheme built on bogus claims about AI-powered trading bots.
What the SEC alleges
- The complaint, filed in the U.S. District Court for the Southern District of Texas, says Fuller marketed passive joint-venture interests in a crypto arbitrage operation from at least October 2022 through mid‑2024. He operated through Privvy Investments LLC and used the assumed business names Privvy Investments and Gateway Digital Investments.
- Fuller allegedly told about 150 investors that proprietary AI trading bots could scan crypto markets, execute high-frequency arbitrage trades, and limit losses via stop‑loss coding. Investors were promised outsized, short-term returns—generally 40%–50% in 30–45 days and, in some cases, more than 100% in under a month.
- The SEC says those claims were false. Only about $380,000 (roughly 3% of investor funds) was actually used to buy cryptocurrency, and those trades were made without any of the advertised bots and produced no profits.
Alleged misuse of funds and cover-ups
- According to the complaint, Fuller misappropriated at least $6.2 million for personal expenses, including a home, gambling, travel, and vehicles, and used roughly $5.5 million to make “Ponzi‑like” payouts to earlier investors.
- When investors questioned withdrawals, the SEC alleges Fuller fabricated account statements, referenced fictitious entities, and even used AI to create a fake letter from an auditing firm claiming accounts were “under review” and would be liquidated into a trust.
Charges and remedies sought
- The SEC charged Fuller with violating federal securities registration and antifraud provisions. It is seeking permanent injunctions, disgorgement, civil penalties, and a ban on participating in future securities offerings.
Related bankruptcy action
- The SEC’s lawsuit follows a separate bankruptcy proceeding in which the Justice Department reported that Fuller was denied discharge of more than $12.5 million in debt after admitting he ran Privvy as a Ponzi scheme and fabricated documents, according to court records cited by the DOJ.
Why it matters
- The case highlights ongoing regulatory scrutiny of crypto investment products that invoke “AI trading bots” and guaranteed returns—appeals that continue to surface in alleged frauds across the space. The SEC’s suit underscores the risks investors face when promised rapid, high-yield returns without transparent operations or verifiable trading activity.
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