SEC charges Texas man with $12.3M crypto fraud using fake AI trading bots

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Source: SEC At the center of the scheme were proprietary AI-based trading bots that Fuller claimed would conduct high-frequency arbitrage trading across crypto platforms. “Fuller’s bots did not function as represented,” according to the complaint. Related: SEC Commissioner Peirce defends crypto privacy tools against surveillance push Of the $12.3 million raised, Fuller allegedly misappropriated at least $6.2 million for personal expenses and used roughly $5.5 million to make Ponzi-like payments to earlier investors. To keep the scheme going, he sent investors fake account statements and fabricated correspondence from fictitious entities. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains and civil penalties. The Fuller case comes as the combination of AI and crypto has opened new frontiers for bad actors. Last year, the agency charged multiple crypto platforms and investment clubs in a separate $14 million scheme that also leaned on AI branding to lure retail investors, with fraudsters posing as financial professionals in WhatsApp groups and promising profits from AI-generated trading tips. Related: SEC approves Paxos as ‘blockchain-native’ clearing agency Last month, the SEC charged crypto executive Donald Basile and two companies he controlled with raising roughly $16 million from hundreds of investors through false claims tied to a crypto token called Bitcoin Latinum. Despite recent moves, the agency has acknowledged that some of its past enforcement actions against crypto companies lacked clear investor benefit and misinterpreted federal securities laws. In a statement on its 2025 enforcement results, the regulator said that since fiscal year 2022, it brought 95 actions and imposed $2.3 billion in penalties for book-and-record violations that “identified no direct investor harm” and “produced no investor benefit or protection.” Magazine: AI-driven hacks could kill DeFi — unless projects act now More on the subject

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