SEC Charges Texas Man in $12.3M AI Crypto Trading Fraud

The SEC is charging a Texas resident with running a $12.3 million crypto fraud that promised AI-driven trading returns but instead paid for personal expenses and earlier investors.

Nathan Fuller raised the money from about 150 investors through Privvy Investments, LLC and related names including Gateway Digital Investments, according to an SEC litigation release filed May 29. The scheme ran from at least October 2022 through mid-2024.

Fuller told investors his "proprietary AI-based trading bots" would run high-frequency arbitrage in crypto markets, the SEC alleges. He promised returns of 40-50% within 30 to 45 days, with "guaranteed profits exceeding 100% in as little as 21 days."

The trading systems "did not function as represented," the complaint states. Fuller instead misappropriated the funds, using at least $6.2 million for personal expenses and roughly $5.5 million to make Ponzi-like payments to earlier investors to keep the scheme looking profitable, the SEC alleges.

Fuller reinforced the fraud with fake account statements, fabricated correspondence from fictitious entities, and false assurances that investor funds were secured or insured, according to the complaint.

The SEC charges Fuller with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The agency seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties.