The US Securities and Exchange Commission (SEC) has sued Texas resident Nathan Fuller, alleging he raised approximately $12.3 million from approximately 150 investors through a crypto investment scheme built on false claims of an AI-powered trading bot, guaranteed returns, and insurance protection.
According to a complaint filed in the U.S. District Court for the Southern District of Texas, Fuller operated through Privy Investments LLC and the assumed business names Privy Investments and Gateway Digital Investments.
The SEC says he sold dormant joint venture interests in the alleged crypto arbitrage trading operation from at least October 2022 to mid-2024.
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.
The complaint alleges that investors were promised returns of 40% to 50% within 30 to 45 days and, in some cases, returns of more than 100% in less than a month.
The SEC says those representations were false. According to the complaint, only $380,000, or about 3% of investor funds, were used to purchase cryptocurrencies without the involvement of bots. The agency says those trades were made without the advertised bot and made no profits.
Instead, Fuller allegedly misused at least $6.2 million for personal expenses, including purchases of homes, gambling, travel, and vehicles, while using approximately $5.5 million to make “Ponzi-like payments” to investors.
The complaint says that as withdrawal concerns grew, Fuller created fabricated account statements showing gains, cited fake entities and used artificial intelligence to generate a letter from a purported auditing firm claiming that investor accounts were under review and would later be turned over to a trust.
The SEC charged Fuller with violating the registration and anti-fraud provisions of the federal securities laws and is seeking a permanent injunction, disgorgement, civil penalties and a ban on participating in securities offerings.
The case follows a separate bankruptcy proceeding in which the Justice Department said it was barred from repaying more than $12.5 million in debt after Fuller admitted that he had operated Privy as a Ponzi scheme and fabricated documents, according to court records cited by the DOJ.