SEC charges Texas crypto operator over alleged $12.3 million AI trading bot fraud

Traders Union
All News
Crypto
SEC charges AI crypto fraud

Highlights

Nathan Fuller and Privvy Investments allegedly defrauded investors of $12.3 million from October 2022 to mid-2024 using fake AI crypto trading bots.
The SEC alleges at least $6.2 million was misappropriated for personal expenses and $5.5 million paid out to earlier investors in Ponzi-like payments.
The case reflects the SEC's intensified crackdown on AI-branded crypto fraud schemes, citing recent enforcement actions totaling $14 million and $16 million in separate complaints.

Complaint details and alleged investor deception

The SEC said in a complaint filed in the U.S. District Court for the Southern District of Texas that Nathan Fuller of Cypress, Texas, ran the scheme through Privvy Investments, LLC and under the assumed business name Gateway Digital Investments between at least October 2022 and mid-2024.

Regulators allege Fuller told investors they could earn returns of 40% to 50% within 30 to 45 days, and in some cases guaranteed profits of more than 100% in as little as 21 days. The complaint says he falsely claimed investor money was backed by a surety bond, insured by the Federal Deposit Insurance Corporation, and protected by professional liability insurance.

At the center of the pitch were supposed proprietary AI-based trading bots that Fuller said would carry out high-frequency arbitrage trading across crypto platforms. The SEC alleges those bots did not operate as represented, and that investors were instead sent fake account statements and fabricated correspondence from fictitious entities.

Enforcement push and broader crypto fraud risks

According to the regulator, at least $6.2 million of the funds raised was misappropriated for personal expenses, while about $5.5 million was used for Ponzi-like payments to earlier investors. The agency is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains and civil penalties.

The case adds to a broader enforcement focus on crypto schemes that use AI branding as a marketing tool. The SEC says that last year it charged multiple crypto platforms and investment clubs in a separate $14 million operation in which promoters posed as financial professionals in WhatsApp groups and promised gains from AI-generated trading tips.

Last month, the agency also charged crypto executive Donald Basile and two companies he controlled over an alleged $16 million fundraising scheme tied to a token called Bitcoin Latinum. At the same time, the SEC has acknowledged in a statement on its 2025 enforcement results that some past actions against crypto companies identified no direct investor harm and produced no investor benefit or protection.

Our earlier article on the CFTC’s approval of the first U.S.-listed perpetual bitcoin contract explained how regulators are beginning to bring popular offshore-style perpetual futures into a more formal U.S. framework. We also noted that rapid growth on venues such as Hyperliquid—along with high leverage and limited oversight—has intensified broader concerns about risk exposure across crypto markets and beyond.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.