The U.S. Securities and Exchange Commission sued Texas resident Nathan Fuller on May 28, alleging he raised roughly $12.3 million from about 150 investors by selling access to AI-powered crypto trading bots that, according to the agency, never traded a single dollar. The complaint, filed in the U.S. District Court for the Southern District of Texas, says Fuller ran Privvy Investments LLC as a fraud from October 2022 through mid-2024. Of all the money raised, only about $380,000, near 3%, was ever used to buy cryptocurrency, and the SEC says none of it was handled by the automated bots Fuller advertised. The case arrives as regulators pay closer attention to fraud that uses artificial intelligence as the hook.
Crypto arbitrage is the practice of buying a token on one exchange and selling it on another at a higher price to pocket the difference. Fuller marketed his operation as a system that used proprietary AI bots to run this strategy at high frequency while capping losses with stop-loss code.
- The SEC charged Nathan Fuller of Cypress, Texas, on May 28 over a $12.3 million crypto scheme tied to fake AI trading bots.
- About 150 investors were promised returns above 40% to 50% in 30 to 45 days, and in some cases more than 100% within 21 days.
- Only about $380,000 of the $12.3 million bought crypto. The SEC says Fuller kept $6.2 million and paid $5.5 million to earlier investors in Ponzi fashion.
- Fuller allegedly used ChatGPT to draft a fake audit letter and invented a firm called Blockchain Audit Solutions to stall withdrawals.
Published: May 31, 2026, 16:00 UTC
How the alleged scheme worked
Fuller sold joint-venture interests through Privvy Investments and a second name, Gateway Digital Investments, the complaint states. Investors were told their money would feed an automated crypto arbitrage operation that produced steady, outsized returns.
The promised numbers were the draw. The SEC says Fuller guaranteed some investors profits above 40% to 50% within 30 to 45 days, and told others they would clear more than 100% in as little as 21 days. Returns at that scale, guaranteed, are a standard marker of investment fraud.
The money went elsewhere. According to the complaint, Fuller misappropriated at least $6.2 million for personal use, including a house worth about $1 million, gambling, trading cards, travel, and a Jeep. Another $5.5 million went to earlier investors as Ponzi-like payments, a pattern that keeps a scheme alive until new deposits dry up.
AI and crypto keep colliding in security cases, and this one shows the marketing side of that overlap.
Why it matters for AI-branded crypto products
The case is a clear signal that “AI-powered” has become a selling point fraudsters reach for. The label adds a veneer of sophistication that is hard for retail investors to test, and Fuller leaned on it instead of any working technology.
The fabricated paperwork is the part regulators are likely to cite for years. As investors pushed to withdraw, the SEC says Fuller created a fake auditing firm, Blockchain Audit Solutions, and used ChatGPT to generate a letter claiming investor accounts were under review and would later be liquidated into a trust. Some investors were told their accounts needed “KYC verification” before any payout, a stall tactic dressed up in compliance language.
For anyone evaluating an AI trading product, the takeaway is concrete. Guaranteed returns, opaque “proprietary” technology, and audit documents that cannot be independently confirmed are warnings, not features.
The regulatory angle
The SEC charged Fuller with violating the registration provisions in Sections 5(a) and 5(c) and the antifraud provision in Section 17(a) of the Securities Act of 1933, plus Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The agency detailed the action in its litigation releases. The agency is seeking permanent injunctions, disgorgement with prejudgment interest, civil penalties, and a bar on Fuller participating in future securities offerings.
This is not Fuller’s first turn in court. The civil case comes about nine months after a Texas bankruptcy court denied him a discharge, following his own admission in those proceedings that he had run Privvy as a Ponzi scheme. That prior admission gives the SEC a strong evidentiary footing.
The action fits a wider enforcement posture. The SEC has kept pressure on crypto fraud even as it clears legitimate blockchain infrastructure elsewhere, drawing a line between approved market plumbing and schemes that borrow its vocabulary.
Frequently asked questions
What did the SEC accuse Nathan Fuller of doing?
The SEC alleges Fuller raised about $12.3 million from roughly 150 investors by claiming proprietary AI bots ran high-frequency crypto arbitrage trades. The agency says the bots did not exist and most of the money was never invested in crypto.
Where did the investor money actually go?
According to the complaint, only about $380,000 bought cryptocurrency. The SEC says Fuller kept at least $6.2 million for personal spending and paid roughly $5.5 million to earlier investors in Ponzi-like fashion.
What penalties is the SEC seeking?
The SEC wants permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil monetary penalties, and an order barring Fuller from participating in future securities offerings.
