SEC Sues Texas Man Over $12.3 Million Alleged Crypto Scheme Built on Fake AI Trading Bots

Why This Matters: This case highlights the risks associated with crypto investments promising guaranteed high returns and the potential for fraudulent schemes leveraging AI hype.

Nathan Fuller operated through Privvy Investments LLC and related business names, selling passive joint-venture interests in a crypto arbitrage trading operation from October 2022 through mid-2024. He claimed proprietary AI-based trading bots could scan crypto markets, execute high-frequency arbitrage trades, and limit losses. However, only about 3% of investor funds were actually used to purchase cryptocurrency, and those trades generated no profits.

Fuller allegedly misappropriated millions for personal expenses, including a home purchase, gambling, travel, and vehicles. He also used investor funds to make "Ponzi-like payments" to other investors. To quell withdrawal concerns, Fuller created fabricated account statements and used AI to generate a letter from a fake auditing firm.

The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains, civil penalties, and a ban on Fuller participating in securities offerings. This case is related to a separate bankruptcy proceeding where Fuller was denied discharge of over $12.5 million in debt after admitting to operating Privvy as a Ponzi scheme and fabricating documentation.

The SEC alleges that Nathan Fuller raised $12.3 million from investors through a crypto investment scheme built around false claims of AI-powered trading bots.

Fuller allegedly misappropriated at least $6.2 million for personal expenses and used about $5.5 million to make Ponzi-like payments to investors.

The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains, civil penalties, and a ban on Fuller participating in securities offerings.

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