SEC sues Privvy founder over $12.3M fake AI crypto scheme

The Securities and Exchange Commission filed a complaint on May 29 accusing Nathan Fuller, a Texas entrepreneur and founder of Privvy Investments LLC (also doing business as Gateway Digital Investments), of raising $12.3 million from roughly 150 investors for a purported crypto arbitrage operation that relied on fake AI trading bots. The agency says the scheme ran from at least October 2022 through mid-2024.

The complaint alleges Fuller offered passive joint-venture stakes in an operation he described as powered by proprietary artificial-intelligence bots that could scan markets, execute high-frequency arbitrage trades and limit losses. Investors were promised returns of 40% to 50% in 30 to 45 days and in some cases returns over 100% in under a month. The SEC says the bots were neither AI nor functioning trading software.

Of the $12.3 million raised, the complaint says only about $380,000, roughly 3 percent, was used to buy cryptocurrency. Those trades were made without the advertised bots and produced no profit, according to the filing. The SEC alleges Fuller misappropriated at least $6.2 million for personal expenses, including the purchase of a home and spending on gambling, travel and vehicles. About $5.5 million was allegedly used to make payments to earlier investors in a Ponzi-like manner.

The filing details steps taken when investors sought withdrawals. The SEC alleges Fuller provided fabricated account statements showing fictitious gains, referenced entities that did not exist and used AI tools to generate a letter from a purported auditing firm that claimed investor accounts were under review and would be liquidated into a trust at a later date.

The SEC charged Fuller with violating federal securities registration and antifraud provisions and is seeking permanent injunctions, disgorgement of ill-gotten gains plus interest, and civil penalties. The complaint is a civil action and notes such matters can run parallel to criminal investigations. Fuller will have an opportunity to respond to the allegations in federal court.

The Privvy case is among several enforcement actions this year that target investment offers using AI branding in the crypto sector. The filings highlight instances where regulators say AI labels were applied to investment schemes that lacked the advertised technology.