SEC Charges Texas Man With $12.3M Crypto Fraud Using Fake AI Trading Bots

The Securities and Exchange Commission has charged a Texas man with running a crypto fraud scheme that raised $12.3 million from roughly 150 investors by falsely claiming to use AI-powered trading bots to generate guaranteed returns.

Nathan Fuller, a resident of Cypress, Texas, operated the scheme through his company Privvy Investments, LLC, and under the assumed business name Gateway Digital Investments between at least October 2022 and mid-2024, according to the SEC’s complaint filed in the US District Court for the Southern District of Texas.

Fuller allegedly promised investors returns of 40% to 50% within 30 to 45 days, with some told they could make guaranteed profits exceeding 100% in as little as 21 days. To back up the pitch, he claimed investor funds were secured by a surety bond, insured by the  Federal Deposit Insurance Corporation (FDIC) and protected by a professional liability insurance policy. None of it was true, the SEC alleges.

Source: SEC

At the center of the scheme were proprietary AI-based trading bots that Fuller claimed would conduct high-frequency arbitrage trading across crypto platforms. “Fuller’s bots did not function as represented,” according to the complaint.

Related: SEC Commissioner Peirce defends crypto privacy tools against surveillance push

Half of raised money went to personal expenses

Of the $12.3 million raised, Fuller allegedly misappropriated at least $6.2 million for personal expenses and used roughly $5.5 million to make Ponzi-like payments to earlier investors. To keep the scheme going, he sent investors fake account statements and fabricated correspondence from fictitious entities.

The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains and civil penalties.

The Fuller case comes as the combination of AI and crypto has opened new frontiers for bad actors. Last year, the agency charged multiple crypto platforms and investment clubs in a separate $14 million scheme that also leaned on AI branding to lure retail investors, with fraudsters posing as financial professionals in WhatsApp groups and promising profits from AI-generated trading tips.

Related: SEC approves Paxos as ‘blockchain-native’ clearing agency

SEC charges Donald Basile in $16 million crypto scheme

Last month, the SEC charged crypto executive Donald Basile and two companies he controlled with raising roughly $16 million from hundreds of investors through false claims tied to a crypto token called Bitcoin Latinum.

Despite recent moves, the agency has acknowledged that some of its past enforcement actions against crypto companies lacked clear investor benefit and misinterpreted federal securities laws. In a statement on its 2025 enforcement results, the regulator said that since fiscal year 2022, it brought 95 actions and imposed $2.3 billion in penalties for book-and-record violations that “identified no direct investor harm” and “produced no investor benefit or protection.”

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