coindesk.com
The U.S. Securities and Exchange Commission (SEC) has sued Texas resident Nathan Fuller, alleging he raised about $12.3 million from roughly 150 investors through a crypto investment scheme built around false claims of AI-powered trading bots, guaranteed returns and insurance protections.
According to a complaint filed in the U.S. District Court for the Southern District of Texas, Fuller operated through Privvy Investments LLC and the assumed business names Privvy Investments and Gateway Digital Investments.
The SEC says he sold passive joint-venture interests in a purported crypto arbitrage trading operation from at least October 2022 through mid-2024.
The agency claims that Fuller told investors that proprietary AI-based trading bots could scan crypto markets, execute high-frequency arbitrage trades and limit losses through stop-loss coding.
The complaint alleges investors were promised returns of 40% to 50% within 30 to 45 days and, in some cases, exceeding 100% in less than a month.
The SEC says those representations were false. According to the complaint, only about $380,000, or roughly 3% of investor funds, was used to purchase cryptocurrency without the involvement of bots. The agency says those trades were conducted without the advertised bots and generated no profits.
Fuller, instead, allegedly misappropriated at least $6.2 million for personal expenses, including the purchase of a home, gambling, travel and vehicles, while using about $5.5 million to make “Ponzi-like payments” to investors.
As withdrawal concerns grew, the complaint 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.
The SEC charged Fuller with violating the registration and antifraud provisions of federal securities laws and is seeking permanent injunctions, disgorgement, civil penalties and a ban on participating in securities offerings.
The case follows a separate bankruptcy proceeding in which the Justice Department said Fuller was denied discharge of more than $12.5 million in debt after admitting he operated Privvy as a Ponzi scheme and fabricated documentation, according to court records cited by the DOJ.