SEC sues Texas man over $12.3M alleged fake AI crypto trading scheme

The U.S. Securities and Exchange Commission (SEC) has filed suit against Texas resident Nathan Fuller, alleging he raised approximately $12.3 million from about 150 investors by marketing purported AI-based crypto trading bots and joint-venture interests. The complaint was filed in the U.S. District Court for the Southern District of Texas on May 28, 2026.

According to the SEC complaint, Fuller solicited investments from at least October 2022 through mid-2024, promising outsized returns—often 40-50% in 30-45 days and in some cases over 100% in under a month. The SEC alleges Fuller misappropriated at least $6.2 million for personal expenses, used roughly $5.5 million to make Ponzi-like payments to earlier investors, and spent only about $380,000 (roughly 3%) of investor funds to purchase crypto assets, without using the advertised bots. The filing also details fabricated account statements and false documents used to reassure investors.

While the case is primarily an enforcement action rather than a market-moving event, it underscores heightened regulatory scrutiny of AI-branded crypto products and the reputational risk for the industry. The SEC assigned its Cyber and Emerging Technologies Unit and regional enforcement staff to the investigation, signaling regulator focus on technology-enabled fraud schemes. Market practitioners say such actions tend to increase due diligence requirements among custodians, exchanges and institutional allocators.

The broader context includes a string of recent enforcement actions targeting crypto fraud and a growing alertness around claims that AI can reliably generate outsized trading profits. Regulators have issued consumer advisories about “AI trading bots” and the potential for fraud, and this lawsuit fits into a pattern where authorities seek injunctive relief, disgorgement and civil penalties to deter misuse of AI branding in finance. The SEC’s complaint also references alleged misrepresentations about licenses, bonds and insurance protections that never existed.

Looking ahead, the SEC is seeking permanent injunctions, disgorgement with prejudgment interest, civil penalties and potentially a ban on participating in securities offerings—remedies commonly pursued in similar cases. For investors, the recommended course is greater skepticism toward guaranteed-return claims, verification of licensing and insurance assertions, and insistence on independent custody and audit trails before allocating capital to AI-marketed investment products.