Nathan Fuller, a resident of Cypress, Texas, has been charged by the U.S. Securities and Exchange Commission (SEC) for allegedly orchestrating a substantial crypto fraud scheme amounting to $12.3 million. The SEC’s formal complaint was filed in the U.S. District Court for the Southern District of Texas, marking a significant crackdown on fraudulent activities in the cryptocurrency sector.
Fuller is accused of raising funds from approximately 150 investors through his companies, Privvy Investments LLC and Gateway Digital Investments, between at least October 2022 and mid-2024.
The Promises He Made
In his pitch to investors, Fuller claimed to have developed proprietary AI-powered trading bots capable of executing high-frequency arbitrage trades in the cryptocurrency markets. He promised astonishing returns of 40% to 100% within a mere 21 to 45 days, asserting that losses were mitigated through sophisticated stop-loss coding embedded within the bots.
To further entice investors, Fuller falsely claimed that their investments were secured by a surety bond and insured by the Federal Deposit Insurance Corporation, alongside coverage from a professional liability policy.
Where the Money Actually Went
However, the reality was starkly different. Of the $12.3 million raised, only about $380,000—merely 3%—was utilized for actual cryptocurrency trading. Fuller allegedly diverted a staggering $6.2 million for personal expenditures, which included lavish purchases such as a home, gambling activities, travel, and luxury vehicles.
Furthermore, around $5.5 million was funneled into Ponzi-like payments to earlier investors, a desperate attempt to keep the fraudulent scheme afloat.
How He Tried to Cover It Up
As investors began to demand withdrawals, Fuller resorted to deception. He issued fake account statements to investors that falsely depicted gains. Moreover, he fabricated communications and employed artificial intelligence to generate a letter from a fictitious auditing firm, claiming that investor accounts were under review and would soon be transferred into a trust.
What Happened Before the SEC Case
Before the SEC’s intervention, Fuller was embroiled in a separate bankruptcy proceeding where the Justice Department revealed that he had been denied the discharge of over $12.5 million in debt. In those proceedings, Fuller admitted to running Privvy as a Ponzi scheme and acknowledged the fabrication of documentation.
What the SEC Is Seeking
The SEC has charged Fuller with violating federal securities laws, including registration and antifraud provisions. The regulatory body is pursuing permanent injunctions, the disgorgement of ill-gotten funds, civil penalties, and a ban preventing Fuller from participating in future securities offerings.
This case follows a previous $14 million scheme that was charged last year, wherein fraudsters leveraged AI branding to attract retail investors via WhatsApp groups. Additionally, the SEC recently charged crypto executive Donald Basile in a separate $16 million fraud case linked to a token called Bitcoin Latinum.
