The SEC has charged Texas resident Nathan Fuller over an alleged $12.3 million AI crypto arbitrage scheme that promised triple digit returns in weeks.
Summary
- SEC alleges Fuller raised about $12.3 million from roughly 150 investors
- Promised 40 to 50 percent returns in 30 to 45 days and over 100 percent in 21 days
- At least $6.2 million allegedly misappropriated, $5.5 million used in Ponzi like payouts
U.S. securities regulators have charged Texas resident Nathan Fuller with orchestrating a fraudulent cryptocurrency trading scheme that raised roughly $12.3 million from about 150 investors through entities including Privvy Investments between October 2022 and mid 2024, according to aĀ litigation releaseĀ from the Securities and Exchange Commission SEC.
The SEC alleges Fuller told investors he had built a proprietary artificial intelligence powered high frequency arbitrage ātrading robotā that could generate extraordinary, low risk profits on crypto assets, while in reality diverting millions of dollars for personal use and running what regulators describe as a Ponzi style operation.
SEC says AI crypto robot pitch hid $12.3 million fraud
According to the complaint, Fuller marketed investment contracts that promised returns of āover 40 to 50 percentā within 30 to 45 days, and in some cases āguaranteedā returns of more than 100 percent in as little as 21 days, claims that far exceed even the most aggressive yield offerings seen during previous cycles of speculative crypto mania such as the collapse of Mirror Trading International and other arbitrage themed schemes flagged by theĀ SEC.
Alleged Ponzi mechanics and AI hype
Regulators say the vaunted AI trading robot ādid not operate as advertised,ā and instead of deploying most of the capital into legitimate cryptocurrency markets, Fuller allegedly misappropriated at least $6.2 million of investor funds for personal expenses including luxury goods and travel, while using approximately $5.5 million to make payouts to earlier investors, mimicking the classic flows of a Ponzi scheme.
The SECās filing describes a pattern of forged account statements, fabricated documents, and false performance updates that were used to reassure investors and entice new victims, echoing recent enforcement actions against AI branded crypto scams that used fake trading dashboards, doctored screenshots, and scripted chat group ātestimonialsā to lure users into bogus platforms, as in a separate $14 million WhatsApp based AI tip operation detailed by theĀ Hacker News.
Court documents cited by ChainCatcher further note that Fuller sold these products through several vehicles tied to Privvy Investments, part of a broader wave of AI infused marketing that has swept both traditional and digital asset markets since 2023 and has already drawn multiple enforcement actions for deceptive practices targeting retail investors.
The SEC is seeking permanent injunctions, disgorgement of what it calls ill gotten gains plus interest, and civil penalties against Fuller, continuing a long running crackdown on crypto themed Ponzi operations that cloak themselves in technical jargon, from early bitcoin based schemes highlighted by theĀ SECĀ to more recent āAI tradingā clubs that promise risk free yields.
In a previousĀ crypto.newsĀ report on SEC actions against AI labelled trading platforms, regulators warned that guaranteed double digit monthly returns in crypto or any other asset class are a red flag, particularly when the strategy is described as secret, proprietary, or too complex to explain, a pattern mirrored almost exactly in the allegations against Fuller.
Elsewhere,Ā crypto.newsĀ has chronicled how courts have increasingly refused to treat bankruptcy as a refuge for crypto fraud operators, with judges denying discharge when they find concealed assets or falsified records, an issue Fuller has already faced in parallel proceedings over Privvyās finances, while a separateĀ crypto.newsĀ analysis has traced how AI hype provides cover for old fashioned Ponzi architecture dressed up in algorithmic jargon.
Given the SECās latest complaint and the broader pattern of enforcement, investors drawn to AI themed arbitrage pitches have one more high profile reminder that any promise of triple digit returns in a matter of weeks, especially in opaque crypto strategies, is far more likely to end in litigation than in life changing gains.
