The SEC filed a lawsuit Thursday against a Texas man named Fuller, alleging he ran a $12.3 million crypto investment scheme built on promises of AI-powered trading bots. According to the complaint, Fuller diverted $6.2 million for personal expenses and used another $5.5 million to make Ponzi-like payments to earlier investors. Only about 3% of the money — roughly $369,000 — actually went toward crypto trading.
How the scheme worked
Fuller pitched automated trading bots that he claimed used artificial intelligence to generate consistent returns in volatile crypto markets. Investors were told their funds would be pooled and actively traded. Instead, the SEC says, the operation was mostly a shell. The small amount that did hit exchanges was not enough to produce the returns Fuller promised. The rest of the money was spent on what the agency calls “personal luxuries.” The complaint doesn't name the exchange or the trading platform, but the mismatch between the pitch and the reality is stark.
The Ponzi-like mechanics
The $5.5 million used for payouts to earlier investors is the classic sign of a Ponzi structure. New money went out the door to keep old investors happy, making the scheme look profitable when it wasn't. That kind of churn can sustain itself only so long before the math breaks. The SEC's timing suggests the agency believes the break came, or was about to.
Where the money went
Fuller allegedly spent $6.2 million on himself — a number that dwarfs the trading activity. The complaint doesn't itemize every purchase, but the implication is clear: the scheme was less about building a trading business and more about funding a lifestyle. For investors who handed over cash expecting a tech-driven edge, the real story is a lot older than AI.
What happens next
The SEC is seeking disgorgement of ill-gotten gains, civil penalties, and an injunction barring Fuller from ever running another investment scheme. A federal court in Texas will handle the case. No trial date has been set, but the agency typically moves to freeze assets quickly in fraud cases. Investors who lost money in the scheme may eventually have a chance to file claims through an SEC-administered fund — but that process, if it happens, will take months or years.
