The U.S. Securities and Exchange Commission (SEC) has initiated a lawsuit against Nathan Fuller, a resident of Texas, accusing him of raising approximately $12.3 million from around 150 investors through a fraudulent cryptocurrency investment scheme that falsely claimed to use AI-powered trading bots.
As detailed in a complaint submitted to the U.S. District Court for the Southern District of Texas, Fuller allegedly operated under Privvy Investments LLC and the business names Privvy Investments and Gateway Digital Investments.
The SEC's allegations indicate that Fuller marketed passive joint-venture interests in a supposed crypto arbitrage trading venture from at least October 2022 until mid-2024.
He purportedly assured investors that proprietary AI trading bots could analyze cryptocurrency markets, perform rapid arbitrage trades, and mitigate losses through stop-loss coding.
Investors were reportedly promised returns of between 40% and 50% in a span of 30 to 45 days, with some claims suggesting returns exceeding 100% within a month. However, the SEC contends these claims were misleading. The agency states that only about $380,000, which is approximately 3% of the total funds raised, was actually used to buy cryptocurrency, and these transactions were done without the involvement of the claimed bots, yielding no profits.
Instead, Fuller allegedly misappropriated at least $6.2 million for personal expenditures, including a home purchase, gambling, travel, and vehicles, while approximately $5.5 million was used for “Ponzi-like payments” to investors.
As concerns over withdrawals increased, Fuller purportedly fabricated account statements indicating gains, referenced nonexistent entities, and generated a letter using AI that claimed investor accounts were under review and would eventually be liquidated into a trust.
The SEC has charged Fuller with breaching both registration and antifraud provisions of federal securities laws, seeking permanent injunctions, disgorgement of profits, civil penalties, and a prohibition on participating in future securities offerings.
This legal action follows a separate bankruptcy case in which the Justice Department noted that Fuller was denied the discharge of over $12.5 million in debt after admitting to running Privvy as a Ponzi scheme and fabricating documents, as per court records cited by the DOJ.
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What to know:
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