The U.S. Securities and Exchange Commission (SEC) has filed formal charges against Nathan Fuller from Texas, alleging he defrauded investors using artificial intelligence-powered crypto trading bots. Nearly 150 investors were reportedly lured into the scheme, which amassed a total of $12.3 million.
Big profits promised with artificial intelligence
Nathan Fuller, based in Cypress, Texas, operated under the name Privvy Investments, and also did business as Gateway Digital Investments. According to filings by the SEC in the Southern District of Texas, Fuller ran the investment scheme from October 2022 until mid-2024.
Investors were enticed with promises of exceptionally high returns, including claims of 40 to 50 percent profits within 30 to 45 days. Some were even guaranteed more than 100 percent returns in just 21 days. Fuller assured participants their funds were secured by a surety bond, insured by the Federal Deposit Insurance Corporation (FDIC), and protected by professional liability insurance. The SEC stated these assurances were entirely false.
Glossary: A surety bond is a third-party financial guarantee that a person or institution will fulfill their obligations. In the U.S., these are often used to enhance investment security, but their authenticity should be scrutinized, especially in the crypto sector.
How the scheme operated
At the heart of the scam were specialized trading bots purportedly powered by artificial intelligence, allegedly executing high-frequency arbitrage trades in the crypto markets. However, the SEC determined these bots did not actually function as advertised.
The complaint stated, “Fuller’s bots did not process investor funds as the investors believed.”
Of the $12.3 million collected, at least $6.2 million was diverted for Fuller’s personal use. About $5.5 million was used to pay returns to earlier investors, following a classic Ponzi-like structure. To keep the scheme alive, participants received fake account statements and fabricated correspondence made to appear as if sent from legitimate companies.
SEC steps up action against crypto fraud
With this filing, the SEC is seeking a permanent injunction against Fuller, the return of ill-gotten gains, and financial penalties. The authority highlights a recent spike in AI-themed crypto scams, noting a similar $14 million case last year where fraudulent financial experts used WhatsApp groups to lure investors by touting artificial intelligence.
Ongoing Bitcoin Latinum investigation
Just last month, the SEC brought similar accusations against crypto executive Donald Basile and two companies he controlled. Through the token Bitcoin Latinum, they allegedly raised around $16 million from hundreds of investors. The trend points to the agency’s increasingly firm stance on misconduct in the digital asset sector.
Nonetheless, the SEC has acknowledged in official statements that in certain past cases, fines were imposed without direct benefit to investors and some legal enforcements had been misinterpreted. In the previous year, the agency initiated 95 separate crypto-related lawsuits, resulting in a total of $2.3 billion in penalties.
