- A Texas court denied Nathan Fuller’s attempt to erase over $12.5 million in debt after he admitted to running a crypto-based Ponzi scheme through Privvy Investments LLC.
- Fuller used investor money to buy luxury items, pay for gambling trips, and purchase a home for his ex-wife worth nearly $1 million.
- The court found Fuller concealed assets, provided false records, and lied in bankruptcy and company filings.
- Legal experts say the decision proves that bankruptcy protection does not shield crypto fraudsters from liability, though victims may not fully recover lost funds.
- Bankruptcy courts can use broad investigative powers, but recovering money remains difficult if assets are spent or moved overseas.
Nathan Fuller, a Texas resident, was denied bankruptcy discharge by a Houston court after admitting to operating a Ponzi scheme using cryptocurrency investments through his company, Privvy Investments LLC. The court’s decision leaves Fuller personally responsible for more than $12.5 million in debts.
According to an announcement from the Department of Justice’s Office of Public Affairs, Fuller used customer funds to purchase high-end goods, travel to gambling destinations, and buy a home worth nearly $1 million for his ex-wife. The court determined that Fuller hid assets, created false records, and lied in both personal and business bankruptcy filings.
Fraudsters seeking to whitewash their schemes will not find sanctuary in bankruptcy, said U.S. Trustee Kevin Epstein, who oversees the region including southern Texas. Bankruptcy law regularly denies cases involving concealed assets or false records, but this ruling reinforced that crypto crimes receive no special protections, according to Navodaya Singh Rajpurohit, legal partner at Coinque Consulting. Rajpurohit told Decrypt the case was notable because of the clear rejection of bankruptcy for digital asset fraud.
The ruling arrives as regulators warn about cryptocurrency firms using bankruptcy to avoid responsibility, with former CFTC Commissioner Kristin Johnson highlighting repeated failures in the sector. Fuller’s bankruptcy filing came after he was sued by investors in October 2024, with a court-appointed receiver seizing his assets. He admitted to running Privvy Investments as a Ponzi scheme and failed to contest the allegations, resulting in a default judgment.
Bankruptcy courts have the authority to trace and recover assets, even across borders, sometimes using international legal tools. According to Rajpurohit, trustees can force exchanges and banks to hand over records and use blockchain analysis to track digital currency movements. However, as legal expert Alex Chandra from IGNOS Law Alliance noted, the chance of full repayment for victims remains low if funds have already been spent or moved abroad.
Traceability does not guarantee recoverability. Crypto can be laundered or spent faster than it can be frozen, Chandra explained.
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