The SEC charged Nathan Fuller, founder and sole member of Privvy Investments LLC in Cypress, Texas, with operating a $12.3 million crypto fraud scheme in a complaint filed Thursday in federal court in Houston. Fuller raised the money from about 150 investors across nine states and two foreign countries between October 2022 and mid-2024 by falsely claiming proprietary AI-based bots autonomously executed high-frequency arbitrage trades, promising returns of 40% to 50% within 30 to 45 days. The bots carried no AI functionality and Fuller used only about $380,000, roughly 3% of funds raised, to actually buy crypto, generating no profit, while misappropriating at least $6.2 million on personal expenses and routing about $5.5 million back to earlier investors in Ponzi-like payments. The case follows the SEC's December action against a network of fake crypto platforms accused of a $14 million scam and builds on enforcement efforts by the agency's Cyber and Emerging Technologies Unit targeting AI-branded crypto fraud schemes.
SEC Files Charges Against Privvy Founder
The SEC filed the complaint Thursday in federal court in Houston, charging Fuller with violations of the registration and antifraud provisions of the Securities Act and the Exchange Act. Fuller also operated under the assumed name Gateway Digital Investments. Some investors were told they could earn guaranteed profits topping 100% in as little as 21 days, according to the SEC.
Fuller Misappropriated $6.2 Million on Personal Expenses
The SEC alleges Fuller misappropriated at least $6.2 million on a roughly $1 million house, gambling, trading cards, travel and a Jeep. About $5.5 million was routed back to earlier investors in Ponzi-like payments. Only about $380,000, roughly 3% of the funds raised, was used to actually buy crypto, generating no profit, the complaint says.
Fake AI Bots Generated Zero Profits
Fuller told investors that proprietary AI-based bots autonomously scanned crypto trading platforms to capture small price gaps through high-frequency arbitrage. The bots did not work as advertised. To the extent the code ran at all, it carried no AI or stop-loss functionality, according to the SEC.
Fuller Fabricated Credentials and Insurance Claims
To quiet investor concerns, Fuller falsely claimed he held a Texas money-transmitter license and a surety bond, that funds were FDIC-insured, and that a professional-liability policy backed the venture, the agency says. The complaint says Fuller invented an insurer called Texas Guarantors & Securities, and altered a genuine but short-lived biBERK certificate to show $5 million in professional-liability coverage that the policy explicitly excluded.
ChatGPT Used to Create Fake Audit Firm
As investors tried to withdraw funds in June 2024, Fuller created a fake firm called Blockchain Audit Solutions and used ChatGPT to draft a phony letter telling investors their accounts had been moved and needed "KYC verification" before any payout, according to the complaint.
Prior Bankruptcy Court Denied Fuller Debt Discharge
A Texas bankruptcy court denied Fuller a discharge of more than $12.5 million in debt in September after he admitted to operating Privvy as a Ponzi scheme and fabricating documents to advance it, according to the Justice Department. Fuller filed for Chapter 7 in October 2024 after investors sued him in Texas state court and a receiver seized his assets, the DOJ said.
SEC Seeks Permanent Injunctions and Civil Penalties
The SEC is seeking permanent injunctions, disgorgement with prejudgment interest, civil penalties and a bar from participating in securities offerings. The case was assisted by the SEC's Cyber and Emerging Technologies Unit, launched in early 2025. The unit built its profile on cases like PGI Global founder Ramil Palafox, charged over a $198 million scheme the SEC said masked a fake AI-powered auto-trading platform.
FAQ
What did the SEC charge Nathan Fuller with on Thursday?
The SEC charged Nathan Fuller, founder of Privvy Investments LLC in Cypress, Texas, with operating a $12.3 million crypto fraud scheme in a complaint filed Thursday in federal court in Houston. Fuller raised funds from about 150 investors across nine states and two foreign countries between October 2022 and mid-2024 by falsely claiming AI-based bots executed arbitrage trades, but the bots had no AI functionality and only about $380,000 was used to buy crypto with no profit.
How did Fuller misappropriate investor funds in the Privvy scheme?
The SEC alleges Fuller misappropriated at least $6.2 million on personal expenses including a roughly $1 million house, gambling, trading cards, travel and a Jeep, while routing about $5.5 million back to earlier investors in Ponzi-like payments. Only about 3% of the $12.3 million raised was used to actually buy crypto, generating no profit.
What fake credentials did Fuller claim to have?
Fuller falsely claimed he held a Texas money-transmitter license and a surety bond, that funds were FDIC-insured, and that a professional-liability policy backed the venture. The complaint says Fuller invented an insurer called Texas Guarantors & Securities and altered a genuine biBERK certificate to show $5 million in professional-liability coverage that the policy explicitly excluded.
