CoinDesk
The SEC sued Texas resident Nathan Fuller on Wednesday, alleging he raised roughly $12.3 million from about 150 investors through Privvy Investments LLC and the dba Gateway Digital Investments by selling passive joint-venture interests in a purported AI-driven crypto arbitrage operation that ran from at least October 2022 through mid-2024. According to the complaint filed in the U.S. District Court for the Southern District of Texas, Fuller marketed proprietary bots that he claimed could scan markets, execute high-frequency arbitrage and cap losses through stop-loss code, while promising returns of 40% to 50% within 30 to 45 days — and in some cases more than 100% in under a month.
The agency says those representations were false on every measurable dimension. Only about $380,000, or roughly 3% of investor funds, was used to buy crypto, and those trades were placed without the advertised bots and generated no profits. Fuller allegedly diverted at least $6.2 million to personal expenses including a home, vehicles, gambling and travel, and used roughly $5.5 million to make Ponzi-like payments to earlier investors. As withdrawals piled up, the complaint alleges he produced fabricated account statements, cited fictitious entities and used AI to generate a letter purportedly from an auditing firm claiming accounts were under review and would later be liquidated into a trust.
Why it matters
The complaint is the clearest data point yet on how AI has migrated from the marketing layer of crypto fraud into the evidentiary layer — the same technology used to pitch the scheme was used to fabricate the documents meant to keep it alive. For retail investors who have spent two years being sold AI-assisted everything, the case draws a clean line between legitimate algorithmic trading products and the boilerplate "AI bot" pitch that now anchors a meaningful slice of small-dollar crypto fraud.
The SEC charged Fuller with violations of the registration and antifraud provisions of federal securities laws and is seeking permanent injunctions, disgorgement, civil penalties and a bar from participating in securities offerings.
Frequently asked questions
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Who did the SEC sue and what is he accused of?
The SEC sued Texas resident Nathan Fuller, alleging he raised roughly $12.3 million from about 150 investors through Privvy Investments LLC and Gateway Digital Investments by marketing a fake AI crypto arbitrage scheme from October 2022 through mid-2024.
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How were investors allegedly misled about the AI trading bots?
Fuller allegedly told investors that proprietary bots could scan crypto markets, execute high-frequency arbitrage trades and cap losses through stop-loss code, promising returns of 40% to 50% in 30 to 45 days and sometimes more than 100% in under a month. The SEC says those representations were false.
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What actually happened to the $12.3 million raised from investors?
According to the complaint, only about $380,000 — roughly 3% — was used to buy crypto, and those trades were placed without the advertised bots and generated no profits. Fuller allegedly diverted at least $6.2 million to personal expenses and used about $5.5 million for Ponzi-like payments to earlier investors.
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How was AI used beyond the initial marketing of the scheme?
As withdrawal requests grew, Fuller allegedly produced fabricated account statements, cited fictitious entities and used AI to generate a letter purportedly from an auditing firm claiming accounts were under review and would later be liquidated into a trust.
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What relief is the SEC seeking and is there a related case?
The SEC charged Fuller with violating the registration and antifraud provisions of federal securities laws and is seeking permanent injunctions, disgorgement, civil penalties and a bar from participating in securities offerings. The complaint also references a parallel bankruptcy proceeding in which the DOJ said…
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