In the USA, the Securities and Exchange Commission (SEC) filed an official criminal complaint against Texas’ Nathan Fuller for allegedly deceiving investors with artificial intelligence-supported crypto trading bots. It was reported that a total of $12.3 million was collected from approximately 150 investors in the fraud scheme in question.
Big profits with the promise of artificial intelligence
Nathan Fuller lived in Cypress, Texas and operated under the name Privvy Investments. It was also stated that he was conducting business under the name Gateway Digital Investments. Fuller operated this investment scheme from October 2022 until mid-2024, according to the SEC’s filing with the Southern District Court of Texas.
Investors were promised returns of 40 to 50 percent within 30 to 45 days. Some investors were offered guaranteed profits exceeding 100 percent in 21 days. Fuller claimed that investor funds were insured by a surety bond, insured by the Federal Deposit Insurance Corporation (FDIC), and protected by professional liability insurance. In the SEC’s statement, it was stated that these statements were completely unfounded.
Mini dictionary: Surety bond is a financial guarantee given by a third party that a person or institution will fulfill its obligations. In the US, it is often used to increase the security of investments, but the authenticity of such assurances should be carefully examined, especially in the crypto world.
How did the system work?
At the center of the fraud scheme were special trading bots powered by artificial intelligence and purported to perform high-frequency arbitrage trades in crypto markets. However, the SEC stated that these bots did not actually work as promised.
In the complaint file, it was stated that “Fuller’s bots did not process funds as investors thought.”
At least $6.2 million of the $12.3 million collected was used for Nathan Fuller’s personal expenses. Approximately 5.5 million dollars were transferred through payments to previous investors, a classic pyramid scheme. In order for the scheme to continue, investors were sent fake account statements and correspondence that appeared to be sent from fictitious companies.
SEC’s steps against crypto accelerated
As part of this filing, the SEC is seeking a permanent ban, restitution of ill-gotten gains, and fines against Fuller. The institution points out that there has been a significant increase in artificial intelligence-themed crypto scams recently. Last year, in another crypto fraud attempt that featured artificial intelligence, action was taken regarding a similar case of $ 14 million, where fake financial experts deceived investors in WhatsApp groups.
Bitcoin Latinum case is on the agenda
Last month, the SEC filed similar charges against cryptocurrency executive Donald Basile and two companies he controls. It was claimed that approximately 16 million dollars were collected from hundreds of investors through the token associated with it, called Bitcoin Latinum. These developments show that the institution has recently taken a tougher position against irregularities in the crypto asset market.
On the other hand, the SEC admitted in its official statements that it imposed penalties in some of its past practices without providing direct investor benefit and that some law practices were misinterpreted. It was reported that a total of $2.3 billion in fines were imposed in 95 different crypto cases last year.
