SEC Charges Texas Man in $12 Million Crypto Fraud Involving Fake AI Trading Bots

The SEC accuses a Texas man of defrauding investors out of $12.3 million by falsely promising guaranteed AI-based crypto trading profits, with much of the money used for personal expenses and Ponzi payouts.

Editorial Team · May 30, 2026 · 2 min read · Source: cointelegraph.com

A Texas resident stands charged by the Securities and Exchange Commission (SEC) for orchestrating a crypto fraud scheme that bilked approximately 150 investors out of $12.3 million. Nathan Fuller allegedly ran the operation through Privvy Investments, LLC, using the alias Gateway Digital Investments over nearly two years.

Fuller convinced investors that proprietary AI-powered trading bots could generate returns between 40% and 50% in just over a month, with some promises exceeding 100% in as little as three weeks. He further assured clients that their funds were secured by a surety bond, insured by the Federal Deposit Insurance Corporation (FDIC), and covered by professional liability insurance—claims that the SEC says were entirely fabricated.

The core of Fuller’s pitch relied on supposed AI-driven high-frequency arbitrage trading bots operating across various cryptocurrency platforms. However, court filings indicate these bots “did not function as represented,” and the entire system was a sham designed to deceive investors.

According to the SEC’s complaint filed in federal court in Texas, Fuller diverted more than half of the funds raised—an estimated $6.2 million—for personal use. Around $5.5 million was circulating within the scheme, used to pay off earlier investors in a classic Ponzi structure. To sustain investor trust, Fuller supplied fabricated account statements and falsified communications from non-existent entities.

The SEC has pursued permanent injunctions, demands for the return of illicit gains, and civil penalties against Fuller. This case highlights emerging risks as fraudsters increasingly exploit the intersection of artificial intelligence and cryptocurrencies.

In recent years, the SEC has confronted several crypto schemes capitalizing on AI branding to lure unsuspecting retail investors. Similar scams have involved false claims of AI-generated trading tips communicated through social media channels, and other high-profile cases include charges against crypto executives for multi-million-dollar frauds related to token sales.