SEC Targets Texas Operator Behind Alleged $12.3M AI Crypto Fraud Scheme

• SEC charged Privvy Investments founder Nathan Fuller over alleged $12.3 million crypto fraud scheme.
• Regulators claim investor funds financed personal spending and Ponzi-like payments.
• Fake insurance documents and AI-generated withdrawal notices allegedly misled investors.

Nathan Fuller, founder of Privvy Investments LLC, has been charged by the U.S. Securities and Exchange Commission over an alleged $12.3 million crypto fraud scheme that promoted fake AI-powered trading capabilities and unrealistic investment returns. The regulator claims Fuller raised millions from investors while misrepresenting how the operation functioned.

According to the SEC, Fuller collected funds from roughly 150 investors across nine states and two foreign countries between October 2022 and mid-2024. He allegedly operated through Privvy Investments and Gateway Digital Investments while marketing a cryptocurrency investment program built around proprietary AI trading bots.

Investors were told the software could automatically identify price differences across crypto exchanges and profit from high-frequency arbitrage opportunities. Fuller reportedly promised returns of 40% to 50% within 30 to 45 days. In some cases, investors were assured they could double their money within three weeks.

However, SEC investigators allege the technology never performed as advertised. Court filings state that the software lacked the AI and stop-loss functions described to investors. Moreover, only about $380,000 of the $12.3 million raised was used to purchase cryptocurrency. Regulators say those trades generated no profits.

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SEC Alleges Investor Money Funded Personal Expenses

The SEC claims Fuller diverted at least $6.2 million of investor funds for personal spending. Those expenses allegedly included a home worth approximately $1 million, gambling activities, travel costs, trading cards, and a Jeep vehicle. Additionally, about $5.5 million was allegedly sent to earlier investors in payments that regulators described as Ponzi-like distributions.

Authorities also accuse Fuller of misleading investors about regulatory protections surrounding the business. He allegedly claimed to possess a Texas money-transmitter license and a surety bond. Furthermore, investors were reportedly told their funds were protected by FDIC insurance and professional liability coverage. The SEC says those claims were false.

Investigators further allege that Fuller created a fictitious insurance company called Texas Guarantors & Securities. Regulators claim he also altered an existing insurance certificate to falsely show $5 million in professional liability coverage for the operation.

Fake Audit Firm Allegedly Used to Delay Withdrawals

As withdrawal requests increased during 2024, the SEC says Fuller launched another effort to reassure investors. Regulators allege he created a company called Blockchain Audit Solutions and used ChatGPT to draft a letter informing investors that their accounts required additional verification before withdrawals could proceed.

The complaint also notes that Fuller previously faced legal challenges related to the business. A Texas bankruptcy court denied the discharge of more than $12.5 million in debt connected to Privvy Investments. Fuller later filed for Chapter 7 bankruptcy after investor lawsuits and asset recovery actions moved forward.

The SEC is seeking permanent injunctions, civil penalties, disgorgement of allegedly ill-gotten gains, and restrictions that would prevent Fuller from participating in future securities offerings. The case adds to a growing list of enforcement actions targeting crypto investment programs that use AI-related claims to attract investors.

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