SEC Charges Texas Man With $12.3 Million Crypto Trading Fraud

The U.S. Securities and Exchange Commission has filed suit against Nathan Fuller, a Texas man who allegedly raised approximately $12.3 million from approximately 150 investors by falsely claiming to operate AI-powered cryptocurrency trading bots, then misappropriated more than $6 million for personal expenses while using most of the remainder to make Ponzi-like payments.

The complaint, filed May 28 in the U.S. District Court for the Southern District of Texas, charges Fuller with violating the registration and antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC is seeking a permanent injunction, disgorgement of ill-gotten gains, and civil penalties.

Fuller, operating first under the assumed name Gateway Digital Investments and later through Privvy Investments LLC – a Wyoming entity he formed in July 2023 – solicited investors from at least October 2022 through mid-2024. Investors signed joint-venture agreements under which Fuller promised to use proprietary AI-based bots to conduct high-frequency arbitrage trading across cryptocurrency platforms.

According to the complaint, Fuller regularly promised returns of 40% to 50% within 30 to 45 days, and at times guaranteed to double investor principal within 21 days. His solicitation materials included a public-facing website and a 2022 YouTube video purporting to demonstrate the automated trading.

The bots did not function as represented, the SEC alleged. To the extent Fuller’s systems operated at all, they lacked the stop-loss and AI functionality he described. Of the $12.3 million raised, he deployed approximately $380,000 – roughly 3% of investor funds – to purchase cryptocurrency, without using any trading bots. Those transactions generated no profit, the complaint said.

Fuller also falsely told investors he held a money-transmitter license from the Texas Department of Banking, that a surety bond secured their funds, and that their investments were FDIC-insured. None of those representations were accurate, the SEC alleged. A company Fuller identified as “Texas Guarantors & Securities” – purportedly the source of an insurance policy protecting investors – did not exist. Privvy did hold a commercial general-liability policy from biBERK for approximately two months, but it explicitly excluded professional-liability coverage; Fuller allegedly altered the coverage certificate provided to at least one investor to reflect $5 million in professional-liability protection it did not provide.

To conceal the scheme from investors seeking to withdraw funds, Fuller created a web-based app displaying fabricated account balances and emailed statements showing fictitious profits, in one case reflecting returns of more than 334% over a five-month period, according to the complaint. When investors could not withdraw funds, Fuller used ChatGPT to generate a letter from a fabricated entity he called Blockchain Audit Solutions, telling investors their accounts had been transferred and were under audit pending KYC verification before balances could be liquidated.

The SEC alleged Fuller misappropriated at least $6.2 million of investor funds, spending them on a home valued at approximately $1 million, gambling, travel, trading cards, and other personal expenses. He used approximately $5.5 million to make Ponzi-like payments to investors. Investors came from nine states and two foreign countries, the complaint said.

The joint-venture interests Fuller sold constitute securities under the investment contract doctrine, the SEC alleged, and no registration statement was ever filed in connection with their offer or sale.

Fuller has not been charged criminally. The SEC complaint does not reflect findings of fact by a court.

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