The U.S. Securities and Exchange Commission (SEC) filed an emergency action against a Texas man for allegedly defrauding investors of approximately $12.3 million through a fake crypto trading bot boosted by artificial intelligence. The defendant, Nathan Fuller of Cypress, Texas, operated under the names Privvy Investments and Gateway Digital Investments from October 2022 to mid-2024.
Lured by Unrealistic Returns and Fake Insurance
Fuller promised investors extraordinarily high returns — claiming 40% to 50% profits within 30 to 45 days, and even more than 100% returns within just 21 days for some victims. He assured participants that their funds were secured by a surety bond, FDIC insurance, and professional liability insurance. The SEC stated that all these guarantees were completely false.
AI Trading Bots Were a Front
At the center of the scheme were specialized trading bots supposedly powered by AI that executed high-frequency arbitrage in crypto markets. But the SEC determined the bots never actually worked as advertised. The complaint says, “Fuller’s bots did not process investor funds as the investors believed.” Of the $12.3 million raised, at least $6.2 million was diverted for Fuller’s personal use; around $5.5 million was used to pay returns to earlier investors in classic Ponzi fashion. To keep the illusion alive, he fabricated account statements and forged correspondence from legitimate companies.
SEC Cracks Down on AI-Enhanced Crypto Scams
The SEC is seeking a permanent injunction, disgorgement of ill-gotten gains, and civil penalties. The regulator noted a surge in AI-themed crypto fraud, pointing to a similar $14 million case last year where fraudsters used WhatsApp groups to pitch AI trading. Just last month, the SEC charged crypto executive Donald Basile and two companies he controlled over the Bitcoin Latinum token, allegedly raising $16 million from hundreds of investors through false claims. The agency’s enforcement drive has grown aggressive: last year it initiated 95 crypto-related lawsuits, resulting in a total of $2.3 billion in penalties.