The U.S. Securities and Exchange Commission has filed a lawsuit against Nathan Fuller, founder of Privvy Investments LLC, alleging he orchestrated a $12.3 million cryptocurrency fraud scheme
The U.S. Securities and Exchange Commission has filed a lawsuit against Nathan Fuller, founder of Privvy Investments LLC, alleging he orchestrated a $12.3 million cryptocurrency fraud scheme that deceived approximately 150 investors over nearly two years.
The complaint, filed on May 28, 2026, as Civil Action No. 4:26-cv-04237 in the Southern District of Texas, charges Fuller with securities-registration and antifraud violations tied to claims about AI-powered trading bots that never produced returns.
According to the SEC's complaint, Fuller raised approximately $12.3 million from roughly 150 investors from at least October 2022 through mid-2024. He allegedly solicited funds through Privvy Investments LLC and a related entity, Gateway Digital Investments, promising outsized returns from automated cryptocurrency trading.
The SEC alleges that Fuller marketed AI-driven trading algorithms to prospective investors, a tactic regulators have increasingly flagged. The CFTC's Office of Customer Education and Outreach has warned that "fraudsters are exploiting public interest in artificial intelligence (AI) to tout automated trading algorithms, trade signal strategies, and crypto-asset trading schemes that promise unreasonably high or guaranteed returns."
All claims in the complaint remain allegations. Fuller has not been convicted or found liable in this civil action.
The complaint paints a stark picture of where investor money allegedly ended up. Of the $12.3 million raised, only approximately $380,000, roughly 3% of total funds, was actually used to purchase crypto assets. Those transactions generated no profit.
The SEC alleges approximately $6.2 million was misappropriated for Fuller's personal spending. Another $5.5 million was allegedly used for Ponzi-like payments to earlier investors, creating the illusion of legitimate returns while the underlying operation produced nothing.
The gap between what investors were told and what allegedly occurred is central to the case. Fuller reportedly promised returns from sophisticated trading activity, while the vast majority of funds never entered any market. This pattern mirrors warning signs regulators have highlighted across the broader crypto industry, where opaque custody structures and guaranteed-return promises frequently mask fraud.
The case also has a parallel track in the federal bankruptcy system. The U.S. Department of Justice reported that a bankruptcy court denied Fuller a discharge of more than $12.5 million in debt after he made admissions that Privvy operated as a Ponzi scheme and that documentation had been fabricated.
"Fraudsters seeking to whitewash their schemes will not find sanctuary in bankruptcy."
Kevin Epstein, U.S. Trustee, Region 7 (DOJ statement)
That bankruptcy ruling, issued in September 2025, preceded the SEC's civil complaint by roughly eight months, suggesting a coordinated multi-agency enforcement effort.
The SEC's civil complaint seeks standard remedies for fraud cases of this nature: injunctive relief to prevent future violations, disgorgement of ill-gotten gains with prejudgment interest, civil monetary penalties, and potential officer-and-director bars that would prevent Fuller from serving in leadership roles at public companies.
It is important to distinguish between a filing and a final judgment. The complaint initiates litigation; it does not establish guilt. Fuller will have the opportunity to respond, and the case could proceed through discovery, motions, trial, or settlement negotiations.
If settlement talks occur, they typically involve consent orders where the defendant neither admits nor denies findings while agreeing to pay penalties and accept conduct restrictions. Material case updates would be triggered by a court scheduling order, any motion to dismiss, or a settlement filing.
Given the parallel DOJ bankruptcy action where Fuller already made admissions about Ponzi-style operations, the SEC's civil case may face a lower evidentiary hurdle than typical enforcement actions. Admissions in one proceeding can carry weight in related litigation.
The Privvy case offers a textbook example of several warning signs that investors can use to evaluate crypto opportunities. The allegations map directly to patterns regulators have repeatedly identified in enforcement actions.
Investors who encounter these patterns can file tips with the SEC through its online complaint portal. The agency's enforcement division has pursued increasingly aggressive action against crypto fraud in 2025 and 2026.
Has the Privvy founder been convicted?
No. The SEC's action is a civil lawsuit, not a criminal prosecution. The complaint contains allegations that have not been proven in court. Fuller has not been found liable or convicted of any crime in connection with this case.
Can investors recover their funds?
If the SEC prevails or reaches a settlement, disgorgement of funds could lead to a distribution plan for harmed investors. The bankruptcy court's denial of Fuller's discharge of more than $12.5 million in debt also preserves creditors' claims. However, recovery in fraud cases is often partial, as misappropriated funds may have already been spent.
What is the next known court milestone?
The case was filed in the Southern District of Texas on May 28, 2026. The next procedural steps will include service of the complaint on the defendant, followed by a scheduling conference. No trial date has been set. Readers can track filings through the PACER system using docket number 4:26-cv-04237.
How does this relate to the DOJ bankruptcy case?
In September 2025, the U.S. Trustee Program successfully opposed Fuller's attempt to discharge more than $12.5 million in debts through bankruptcy. The court found that Fuller made admissions about operating a Ponzi scheme and fabricating records. The SEC's civil complaint is a separate but related action building on many of the same factual allegations.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
The post U.S. SEC Sues Privvy Founder Over Alleged $12.3M Crypto Scam was initially published on Coincu.
