SEC Sues Texas Resident Nathan Fuller Over $12.3 Million Fake AI Crypto Trading Bot Scheme

The U.S. Securities and Exchange Commission sued Texas resident Nathan Fuller, alleging he raised about $12.3 million from roughly 150 investors through a crypto investment scheme built on false claims of AI-powered trading bots.

“SEC sues Texas man over $12”

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The SEC says Fuller operated through Privvy Investments LLC and the assumed business names Privvy Investments and Gateway Digital Investments from at least October 2022 through mid-2024, selling passive joint-venture interests in a purported crypto arbitrage trading operation.

@coindesk

According to the complaint, Fuller told investors proprietary AI-based trading bots could scan crypto markets, execute high-frequency arbitrage trades, and limit losses through stop-loss coding, while the SEC alleges those representations were false.

The SEC alleges that only about $380,000, or roughly 3% of investor funds, was used to purchase cryptocurrency without the involvement of bots, and that those trades were conducted without the advertised bots and generated no profits.

The SEC’s filing also alleges Fuller misappropriated at least $6.2 million for personal expenses and used about $5.5 million to make “Ponzi-like payments” to investors, as it seeks permanent injunctions, disgorgement, civil penalties, and a ban on participating in securities offerings.

The SEC alleges Fuller promised returns of 40% to 50% within 30 to 45 days and, in some cases, exceeding 100% in less than a month, while also claiming investor funds were protected by insurance and bonding arrangements.

In the SEC’s account, Fuller told investors the AI trading bots would conduct high-frequency arbitrage across crypto platforms, but the complaint says “Fuller’s bots did not function as represented,” according to TradingView’s summary of the SEC’s allegations.

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To conceal losses as withdrawal concerns grew, the SEC says Fuller created fabricated account statements showing gains, referenced fictitious entities, and used artificial intelligence to generate a letter from a purported auditing firm claiming investor accounts were under review and would later be liquidated into a trust.

TradingView also reports that the SEC alleges Fuller misappropriated at least $6.2 million for personal expenses and used roughly $5.5 million to make Ponzi-like payouts to earlier investors.

The SEC’s complaint further alleges that Fuller sent investors fake communications to keep the scheme going, while the SEC seeks permanent injunctions, disgorgement of ill-gotten gains, and civil penalties.

The SEC filed the case in federal court in Texas, and CoinDesk says the complaint was filed in the U.S. District Court for the Southern District of Texas as it seeks permanent injunctions, disgorgement of alleged ill-gotten gains, interest, and monetary penalties.

CoinDesk also links the enforcement action to a separate bankruptcy proceeding, saying the Justice Department told the court Fuller was denied discharge of more than $12.5 million in debt after admitting he operated Privvy as a Ponzi scheme and fabricated documentation.

In the SEC’s allegations as summarized by Cryptonews.net, Fuller offered investment opportunities through Privvy Investments and related business names between October 2022 and mid-2024, promising returns exceeding 40–50% within weeks and guaranteed profits of more than 100% within 21 days.

Cryptonews.net says the SEC’s lawsuit charges Fuller with securities registration and anti-fraud violations under federal securities laws, while the agency seeks injunctive relief, disgorgement of alleged ill-gotten gains, interest, and monetary penalties.

Separately, Bitget’s page frames the SEC’s accusations as involving alleged misappropriation of $6.2 million for personal use and use of $5.5 million for payments resembling a Ponzi scheme, while allocating only 3% of the funds for crypto trading.