SEC Sues Texas Man Over $12.3M Fake AI Crypto Scheme

June 2, 2025 — The U.S. Securities and Exchange Commission has filed a lawsuit against Texas resident Nathan Fuller, alleging he raised approximately $12.3 million from 150 investors through a fraudulent crypto scheme built on false claims of AI-powered trading bots that promised up to 100% returns within 30 days.

Immediate Details & Direct Quotes

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 alleges that from at least October 2022 through mid-2024, Fuller sold passive joint-venture interests in a purported crypto arbitrage trading operation.

The agency claims 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. Investors were promised returns of 40% to 50% within 30 to 45 days, with some cases promising returns exceeding 100% in less than a month.

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

Fuller allegedly misappropriated at least $6.2 million for personal expenses, including purchasing a home, gambling, travel, and vehicles. He used approximately $5.5 million to make “Ponzi-like payments” to investors.

Market Context & Reaction

To cover growing investor concerns about withdrawals, 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. The fake letter claimed investor accounts were under review and would later be liquidated into a trust.

The SEC has charged Fuller with violating registration and antifraud provisions of federal securities laws. The agency is seeking permanent injunctions, disgorgement, civil penalties, and a ban on Fuller 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.

Background & Historical Context

Fuller’s scheme began in October 2022, capitalizing on growing investor interest in AI-driven trading strategies and crypto arbitrage opportunities. The alleged fraud continued through mid-2024 before regulatory action was taken.

The SEC complaint highlights a pattern common in crypto schemes: operators making grandiose technological claims — in this case, proprietary AI trading bots — to attract investor capital that is then diverted for personal use and Ponzi-style payments to earlier investors.

What This Means

This case serves as a warning to investors about crypto schemes promising unrealistic returns, particularly those leveraging AI and automated trading claims. The SEC’s enforcement action demonstrates continued regulatory scrutiny of fraudulent crypto investment offerings.

Only 3% of investor funds actually went toward crypto trading, underscoring how such schemes operate primarily as vehicles for misappropriation rather than legitimate investment. Investors should conduct thorough due diligence on any investment opportunity promising high returns with guaranteed results.

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