SEC Charges Texas Man for $12.3M Crypto Fraud Using Fake AI Bots

The U.S. Securities and Exchange Commission (SEC) has charged Nathan Fuller, a Texas resident, with orchestrating a $12.3 million cryptocurrency fraud. Fuller allegedly lured approximately 150 investors with promises of extraordinary returns through fake AI-powered trading bots, according to the SEC’s complaint filed on May 28, 2026, in the U.S. District Court for the Southern District of Texas.

Operating through Privvy Investments, LLC, and Gateway Digital Investments, Fuller claimed his proprietary AI bots could deliver high-frequency arbitrage trading profits. He guaranteed returns of 40% to 50% within 30 to 45 days, with some investors reportedly promised 100% profits in just 21 days. To bolster his credibility, Fuller falsely asserted that investments were insured by the Federal Deposit Insurance Corporation (FDIC) and backed by liability insurance policies. None of these assurances were real, the SEC alleges.

Instead of deploying investor funds into trading, Fuller misappropriated at least $6.2 million for personal expenses and used $5.5 million to make Ponzi-like payments to earlier investors. The SEC also accused him of issuing fake account statements and fabricating correspondence from non-existent entities to maintain the ruse.

Crypto, AI, and Fraud: A Growing Concern

This case is part of a broader trend of scams exploiting the buzz around artificial intelligence and cryptocurrency. Last year, the SEC charged multiple individuals and entities in a $14 million fraud scheme that similarly leaned on AI branding to attract retail investors. Fraudsters have increasingly used AI as a marketing hook, promising algorithm-driven, risk-free profits that don’t actually exist.

Fuller’s actions also underscore the deceptive potential of combining AI claims with crypto arbitrage, a concept that appeals to investors looking for high returns in volatile markets. However, these schemes often lack transparency, leaving victims with little recourse once funds are lost.

SEC Seeks Accountability

In this case, the SEC is pursuing permanent injunctions, disgorgement of ill-gotten gains, and civil penalties against Fuller. The agency’s enforcement actions have ramped up in recent years, with 95 crypto-related cases initiated since fiscal year 2022, resulting in $2.3 billion in penalties. However, critics argue that many actions have failed to deliver tangible benefits to harmed investors.

Fuller’s legal troubles extend beyond the SEC’s complaint. In August 2025, a U.S. Bankruptcy Court denied him a discharge of over $12.5 million in debt tied to the same fraudulent activities. The court found that Fuller had concealed assets and made false statements during bankruptcy proceedings, further cementing the severity of his misconduct.

Broader Implications

This case serves as a cautionary tale for investors navigating the crypto space. The allure of high returns combined with cutting-edge technology like AI can often mask fraudulent schemes. As regulatory scrutiny intensifies, potential investors should remain vigilant, conduct due diligence, and verify claims made by investment platforms. Meanwhile, the SEC’s ongoing enforcement actions signal an aggressive stance against bad actors exploiting crypto and AI hype.

The Fuller case will now proceed through the court system, with implications not just for the defendant but also for the broader intersection of crypto, AI, and regulatory oversight.

Image source: Shutterstock