Sec charges texas man with $12.3 million ai crypto fraud scheme
Sec alleges multi-million dollar ai trading bot scam
The U.S. Securities and Exchange Commission has accused Nathan Fuller of Cypress, Texas, of running a $12.3 million cryptocurrency fraud built on false claims of advanced AI trading bots.
In a complaint filed Thursday in federal court in Houston, the agency says Fuller defrauded about 150 people across nine U.S. states and two foreign countries between October 2022 and mid-2024.
The sec is seeking a permanent injunction, repayment of ill-gotten gains with interest, civil penalties, and a bar preventing Fuller from participating in any future securities offerings under the Securities Act and Exchange Act.
Promises of rapid, high returns
According to the complaint, Fuller raised money through Privvy Investments LLC and under the name Gateway Digital Investments.
He allegedly told clients they could earn returns of 40% to 50% within 30 to 45 days, with even higher gains for shorter time frames. Fuller reportedly claimed the firm used proprietary artificial intelligence and high-frequency trading to exploit small price discrepancies in digital assets across crypto trading platforms.
Most funds allegedly diverted, not traded
Regulators say the trading pitch was largely a façade.
The sec alleges that only about $380,000—roughly 3% of the $12.3 million raised—was actually used to buy cryptocurrency and that no genuine trading profits were generated.
Instead, according to the filing:
- at least $6.2 million was spent on personal expenses, including real estate, gambling, collectibles, travel, and vehicles
- roughly $5.5 million was used to pay earlier customers in a pattern the agency describes as Ponzi-like
Fabricated insurance, licenses, and a fake guarantor
To bolster credibility, Fuller allegedly invented or falsified key compliance claims.
The sec says he:
- created a fictitious insurer named Texas Guarantors & Securities
- forged a professional liability policy certificate that purported to provide $5 million in coverage
- falsely claimed the business was covered by FDIC insurance
- misrepresented that it held money-transmitter licenses and surety bonds
Regulators say none of these assurances were real.
Fake blockchain auditor and ai-generated letter
As withdrawal requests increased in mid-2024, Fuller allegedly took further steps to stall customers.
According to the complaint, he:
- formed a fictitious company called Blockchain Audit Solutions
- used an AI chatbot to draft a counterfeit letter claiming client funds had been transferred and now required additional verification
The sec says this document was used to delay or avoid honoring redemption requests.
Prior bankruptcy case and admitted ponzi conduct
The enforcement action comes on the heels of Fuller’s prior troubles in bankruptcy court.
In September, a Texas bankruptcy judge refused to discharge more than $12.5 million in debt after Fuller acknowledged that he operated Privvy as a Ponzi scheme. He had entered Chapter 7 proceedings in October 2024 following a state court lawsuit and an asset seizure.
Part of broader crackdown on ai-themed fraud
The complaint was supported by the sec’s Cyber and Emerging Technologies Unit, which has stepped up scrutiny of schemes using artificial intelligence as a marketing hook.
That unit has recently brought other cases involving exaggerated AI-related trading claims, including:
- a $198 million auto-trading scheme
- a $14 million web of fraudulent online platforms charged in late 2025
Regulators say these matters reflect a wider pattern of traditional frauds repackaged with new technology labels.
Mounting losses in ai and crypto-related scams
The enforcement push comes amid steeply rising losses linked to technology-themed fraud.
According to the FBI’s 2025 Internet Crime Report, scams that referenced AI were tied to nearly $893 million in reported losses in the United States, often relying on deepfakes or sophisticated chatbots to deceive victims.
Digital asset-related scams have surged as well. Global losses from fraud involving cryptocurrencies were estimated at $17 billion in 2025. In the same year, Americans reported more than $11 billion in losses from schemes involving digital assets, making it the costliest category of internet crime tracked by the FBI.
Recurring red flags for market participants
The allegations in the Fuller case highlight several common warning signs in the market:
- guaranteed, high returns in short periods: Claims of fixed, double-digit gains over weeks or days conflict with normal market risk and volatility.
- unverified insurance and licenses: False references to insurance, bonding, or regulatory approvals remain a standard tactic. Authorities stress that registrations and licenses can be checked through official databases such as those maintained by the sec and finra.
- ponzi-style payment flows: Using funds from new customers to pay earlier ones is the defining feature of a Ponzi scheme and is unsustainable by design.
- stalling tactics during withdrawals: Sudden references to audits, new verifications, or technical complications when clients seek redemptions are a recurring sign of trouble.
Regulators say any product that combines aggressive return promises, opaque strategies, and difficulty accessing funds should be approached with extreme caution.
Worried about AI trading scams? Learn how crypto safety standards help you verify platforms before investing.
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