SEC Charges Texas Man in $12.3M Crypto Fraud Linked to Fake AI Bots

The Securities and Exchange Commission has charged a Texas man with running a crypto fraud that raised about $12.3 million from roughly 150 investors by falsely claiming AI-powered trading bots would deliver guaranteed returns. The alleged scheme operated through Privvy Investments, LLC, and under the business name Gateway Digital Investments from at least October 2022 to mid-2024, according to the SEC’s complaint filed in the U.S. District Court for the Southern District of Texas.

prosecutors say Nathan Fuller, a Cypress, Texas resident, pitched investors on investments that promised returns of 40% to 50% within 30 to 45 days, and even claimed some could secure guaranteed profits exceeding 100% in as little as 21 days. To bolster the pitch, Fuller allegedly asserted that investor funds were secured by a surety bond, insured by the Federal Deposit Insurance Corporation, and protected by a professional liability insurance policy. The SEC contends none of these assurances were true.

Central to Fuller’s pitch were proprietary AI-based trading bots that Fuller claimed would execute high-frequency arbitrage trades across crypto platforms. The agency states the bots did not function as represented, undermining the core promise behind the investment strategy. The complaint also notes that Fuller used aggressive branding around AI to attract retail investors, a pattern the SEC has flagged in other enforcement actions tied to crypto schemes.

Key takeaways

• The SEC alleges Nathan Fuller raised $12.3 million from about 150 investors through Privvy Investments and Gateway Digital Investments between 2022 and 2024, based on false assurances of AI-driven profits.
• Investors were promised 40–50% returns within 30–45 days, with some claims of profits over 100% in 21 days; sophisticated-sounding claims were used to create an aura of legitimacy around the scheme.
• According to the SEC, investor funds were misused for personal expenses and to make Ponzi-like payments to earlier investors, while many statements were fake and issued by fictitious entities.
• In total, about $6.2 million is alleged to have gone to personal expenses, with roughly $5.5 million paid to earlier investors, as the scheme sought to sustain itself.
• The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains, and civil penalties as part of the action.

Alleged mechanics and misrepresentations

At the heart of the case, according to the SEC, were Fuller’s assurances that AI-enabled trading bots would perform high-frequency arbitrage across multiple crypto venues. The complaint asserts that Fuller’s bots did not operate as advertised, calling into question the legitimacy of the entire investment program. To entice participation, Fuller touted “guaranteed” returns and painted a picture of risk-managed exposure backed by supposed insurance and surety instruments that would shield investors from losses.

The SEC’s filing emphasizes that much of the money raised from investors did not fund real trading activity. Instead, the agency alleges that a substantial portion of the funds was diverted for personal use and for distributions to earlier investors in a manner characteristic of a Ponzi-style arrangement. In an attempt to maintain the illusion of legitimacy, Fuller allegedly produced fake account statements and communications from fictitious entities.

Financial flows and investor restitution risks

From the $12.3 million raised, the SEC alleges that at least $6.2 million was spent on personal expenses. A further roughly $5.5 million was used to make payments to earlier investors—an arrangement designed to create the impression of ongoing liquidity and profitability. The persistence of fake statements and fraudulent correspondence is cited as part of the broader deception that kept investors engaged while funds were diverted away from purported trading activity.

The SEC’s action seeks to unwind the illicit gains and deter future misconduct. The agency is pursuing permanent injunctions to stop Fuller from engaging in similar schemes, disgorgement of any profits obtained through the alleged fraud, and civil penalties. The case highlights the ongoing regulatory focus on the intersection of AI branding and crypto investments, where appearances of sophistication can mask fraudulent intent.

Regulatory backdrop: a broader enforcement pattern around AI and crypto

The Fuller case sits within a wider pattern of enforcement actions that blend AI branding with crypto investment pitches. In a separate action from the same enforcement cycle, the SEC charged three purported crypto asset trading platforms and four investment clubs in a $14 million scheme that also leaned on AI branding to lure retail investors, with fraudsters presenting themselves as financial professionals in messaging apps and promising profits from AI-generated trading tips. The actions illustrate how the SEC is scrutinizing not just outright fraud but also the marketing narratives that accompany crypto offerings tied to AI hype.

In a broader context, the SEC has acknowledged that some of its past crypto enforcement actions benefited from clearer investor protections and avoided overreach. In a 2025 enforcement results update, the regulator noted that since fiscal year 2022 it had brought 95 actions and imposed $2.3 billion in penalties for book-and-record violations that “identified no direct investor harm” and “produced no investor benefit or protection.” The agency has signaled a continued emphasis on rigorous disclosure, investor protection, and clear linkages between securities laws and crypto offerings as the industry evolves.

Related reporting has also centered on debates over crypto regulation and investor privacy. The broader enforcement environment reflects ongoing tensions between innovation and safeguards, with AI-enabled marketing and “guaranteed” returns becoming recurring flashpoints in a market that often intertwines technology, finance, and emerging asset classes.

Source: U.S. Securities and Exchange Commission filings and enforcement releases in this matter, which detail the allegations and relief sought against Fuller and related entities. See the SEC complaint filed in the Southern District of Texas for full allegations and statutory bases.

As the crypto sector continues to test the boundaries of technology and investor protection, market participants should monitor how courts interpret AI-driven claims, the sufficiency of disclosures, and the durability of enforcement actions when real-world trading activity does not substantiate promised returns.

Investors and observers will want to watch how the courts address disgorgement timelines, potential restitution, and the overall precedent set for AI-themed crypto offerings that promise outsized gains with purported risk mitigation.