US Trustee Calls Out ‘Dishonest Debtor’ in $12.5M Crypto Bankruptcy Case

In brief

Nathan Fuller was denied bankruptcy discharge after admitting to running a crypto Ponzi scheme through Privvy Investments LLC.
Fuller spent investor funds on luxury goods, gambling trips, and a nearly $1M home for his ex-wife.
Legal experts say the ruling shows bankruptcy won’t shield crypto fraudsters, though full recovery remains unlikely.

A Texas man who ran a crypto Ponzi scheme and spent investor funds on luxury goods and gambling trips has been denied bankruptcy discharge, with legal experts calling it proof that bankruptcy won’t serve as a “safe harbor” for crypto fraud.

On Wednesday, the Justice Department’s Office of Public Affairs announced that a Houston court denied Nathan Fuller’s request to wipe out more than $12.5 million in debts, after finding he concealed assets, falsified records, and admitted to running his firm, Privvy Investments LLC, as a Ponzi scheme.

The Office of Public Affairs said that the ruling points to the program’s vigilance against “dishonest debtors” who undermine the integrity of the bankruptcy system.

“Fraudsters seeking to whitewash their schemes will not find sanctuary in bankruptcy,” said U.S. Trustee Kevin Epstein of Region 7, which covers the Southern District of Texas.

“Denying discharge for concealment, false oaths, or missing records isn’t rare – it’s one of the primary requirements under the code,” Navodaya Singh Rajpurohit, legal partner at Coinque Consulting, told Decrypt. “What’s notable here is the court’s clean denial in a crypto scheme, reinforcing that bankruptcy is no ‘safe harbor’ for digital-asset fraud.”

The ruling comes as regulators warn of crypto firms misusing bankruptcy, with former CFTC Commissioner Kristin Johnson citing a pattern of failures that collapse and re-emerge to “expose new customers to devastating losses.”

Fuller filed for bankruptcy in October 2024 after investors sued him and a receiver seized his assets, but the U.S. Trustee later alleged he concealed funds, falsified records, and lied in both his personal and Privvy’s filings.

After being held in contempt and admitting to running Privvy as a Ponzi scheme, his failure to contest the case led to a default judgment that leaves him personally liable, while creditors may keep pursuing collections.

U.S. bankruptcy courts possess broad powers to reach assets “wherever located” and can order turnover, Rajpurohit noted, with judges having civil-contempt authority, including “imprisonment until assets are repatriated.”

When crypto or cash is held abroad, he explained, courts rely on cross-border tools including “Chapter 15 recognition, letters rogatory, and international treaties.”

Rajpurohit said trustees can use broad discovery powers to compel records from exchanges, banks, wallet custodians, and cloud providers, with blockchain forensics able to “trace flows even through mixers to identified accounts.

“Courts can then order turnover or unwind transfers and enforce compliance through sanctions, including civil contempt,” he added.

Meanwhile, Even Alex Chandra, partner at IGNOS Law Alliance, cautioned that despite the legal victory, “the likelihood of full recovery is low, particularly if assets were spent on luxury or moved abroad,” telling Decrypt that “investors are often left with partial recovery or structured settlements.”

“Traceability does not guarantee recoverability,” Chandra added. “Crypto can be laundered or spent faster than it can be frozen.”