SEC sues Privvy founder over $12.3 million crypto scheme as AI 'bots' turn out to be neither

The SEC charged a Cypress, Texas resident with running a $12.3 million crypto fraud scheme that leaned on fake AI trading bots, in a complaint filed Thursday in federal court in Houston.

Nathan Fuller, the founder and sole member of Privvy Investments LLC, raised the money from about 150 investors across nine states and two foreign countries between October 2022 and mid-2024, the agency said. He also did business under the assumed name Gateway Digital Investments.

Fuller told investors that proprietary AI-based bots autonomously scanned crypto trading platforms to capture small price gaps through high-frequency arbitrage, promising returns of 40% to 50% within 30 to 45 days, according to the SEC. Some were told they could earn guaranteed profits topping 100% in as little as 21 days.

The bots did not work as advertised. To the extent the code ran at all, it carried no AI or stop-loss functionality, and Fuller used only about $380,000, roughly 3% of the funds raised, to actually buy crypto, generating no profit, the complaint says.

Instead, the SEC alleges, Fuller misappropriated at least $6.2 million on a roughly $1 million house, gambling, trading cards, travel and a Jeep, and routed about $5.5 million back to earlier investors in Ponzi-like payments.

To quiet investor concerns, Fuller falsely claimed he held a Texas money-transmitter license and a surety bond, that funds were FDIC-insured, and that a professional-liability policy backed the venture, the agency says.

None of it was real. The complaint says Fuller invented an insurer called Texas Guarantors & Securities, and altered a genuine but short-lived biBERK certificate to show $5 million in professional-liability coverage that the policy explicitly excluded.

In a twist for an AI-branded scheme, the cover-up also ran on AI. As investors tried to withdraw funds in June 2024, Fuller spun up a fake firm called Blockchain Audit Solutions and used ChatGPT to draft a phony letter telling investors their accounts had been moved and needed "KYC verification" before any payout, according to the complaint.

The civil case is not Fuller's first trip through federal court over Privvy. Last September, a Texas bankruptcy court denied him a discharge of more than $12.5 million in debt after he admitted, according to the Justice Department, to operating Privvy as a Ponzi scheme and fabricating documents to advance it, as previously reported. 

Fuller filed for Chapter 7 in October 2024 after investors sued him in Texas state court and a receiver seized his assets, the DOJ said. The SEC's complaint does not reference that bankruptcy judgment or his prior Ponzi admission.

The case was assisted by the SEC's Cyber and Emerging Technologies Unit. The unit, launched in early 2025, built its profile on cases like PGI Global founder Ramil Palafox, charged last year over a $198 million scheme the SEC said masked a fake AI-powered auto-trading platform.

It also follows the SEC's December action against a network of fake crypto platforms and "AI investment clubs" accused of a $14 million scam, part of a wider run of fraud cases pairing AI branding with promises of guaranteed crypto returns.

The SEC charged Fuller with violating the registration and antifraud provisions of the Securities Act and the Exchange Act, and is seeking permanent injunctions, disgorgement with prejudgment interest, civil penalties and a bar from participating in securities offerings.