The U.S. Trustee and a Houston bankruptcy court have blocked a crypto operator from erasing investor obligations after finding he ran a Ponzi scheme through Privvy Investments LLC. On Wednesday the court denied Nathan Fuller’s request to discharge more than $12.5 million in debts after concluding he concealed assets, falsified records and admitted the firm operated as a Ponzi scheme.
Investigators say Fuller diverted investor cash to luxury purchases, gambling trips and a nearly $1 million home for his ex‑wife. He later filed for bankruptcy in October 2024 while facing lawsuits and a receiver’s asset seizure. After admitting wrongdoing and failing to contest the case, Fuller suffered a default judgment that leaves him personally liable and allows creditors to continue collections.
Regulators and legal experts say the ruling underscores that bankruptcy is not a safe harbor for crypto fraud. “Fraudsters seeking to whitewash their schemes will not find sanctuary in bankruptcy,” said U.S. Trustee Kevin Epstein. Navodaya Singh Rajpurohit of Coinque Consulting noted courts commonly deny discharges for concealment or false oaths and now are applying those powers to digital‑asset cases.
Bankruptcy trustees have broad tools to recover assets, Rajpurohit added: expansive discovery, subpoenas to exchanges, banks and cloud providers, and blockchain forensics that can trace transfers even through mixers. U.S. courts can pursue cross‑border remedies including Chapter 15 recognition and letters rogatory, and may use civil‑contempt sanctions to compel turnover.
Still, recovery prospects remain limited. Alex Chandra of IGNOS Law Alliance warned that funds spent on luxury items or moved overseas make full restitution unlikely, and that traceability does not guarantee recoverability. For investors, the case is a reminder to vet custodians and watch for red flags around promised returns.
Source: Decrypt. Read the original coverage for full details.