The SEC is going after a college student it says ran two investment funds as a vehicle for fraud, misappropriating nearly $7 million.
In a civil action filed March 26, 2026, in the Northern District of Oklahoma (Securities and Exchange Commission v. Kumar, Case No. 26-cv-00184), the Commission alleges that Krish Kumar, a Tulsa-based college student, raised approximately $7.8 million from around two dozen investors through two funds he created and solely managed — Future Fractal Investments LLC and Arcane Resonance Fund, LLC — then transferred the vast majority of those assets into personal accounts he controlled.
According to the SEC, Kumar pitched Future Fractal to investors as a conservative play: a proprietary algorithmic options strategy he had purportedly created and backtested, limited to two index-based ETFs tracking the S&P 500 and Nasdaq-100, with risk of loss capped at approximately 25% and no single trade exceeding 5% of assets under management. He also claimed the fund achieved a 15.7% return during its first week of trading.
The SEC alleges none of that held up. The regulator says Kumar began trading outside the represented strategy on Future Fractal's second day of active trading on or about January 30, 2024, and that records indicate he never traded in one of the two represented ETFs, with only limited trading in the other. As for the claimed first-week return, the SEC says trading analysis shows the fund actually incurred losses of approximately $1,200 for that week. That performance claim, sent in a February 3, 2024, email to more than 30 existing and prospective investors, allegedly helped attract 12 additional investments totaling $4.7 million.
The situation worsened from there, according to the complaint. The SEC alleges Kumar transferred more than $5.6 million of Future Fractal's assets to personal and nominee accounts he controlled beginning in or around late February 2024 through early March 2024, then used those funds to purchase 33,009 option contracts in a single publicly traded crypto-asset technology company focused on Bitcoin mining. Over four trading days in mid-March 2024, approximately 98% of those transferred assets were lost.
When it came time to explain the losses, the SEC says Kumar fabricated the narrative — attributing them to ETF trades and a stop-loss order that the SEC alleges never existed, and attaching what the Commission describes as a photoshopped brokerage screenshot to a March 14, 2024, email to investors.
Months later, Kumar launched a second fund, Arcane Resonance Fund, raising approximately $1.8 million from 10 investors between May 2024 and February 2025, most of whom had not previously invested in Future Fractal and were predominantly parents of his college friends. The SEC alleges he again misrepresented the fund's strategy and risk profile, claiming in offering materials a worst-case expected return of 1.2x and that approximately 99% of assets would be used for investment purposes. The SEC also alleges Kumar told at least one Arcane investor that his prior fund had earned a 30-40% return, even though Future Fractal did not yield a positive return.
Instead of investing the funds as represented, the SEC says Kumar used $300,000 of Arcane investor money to pay a Future Fractal investor for losses sustained in that earlier fund, and $20,000 to satisfy a personal debt unrelated to either fund. He then allegedly transferred the remaining Arcane assets — approximately $1.3 million — to his personal accounts. By March 11, 2025, Kumar informed Arcane investors that the fund was down approximately 80% of its value.
In total, the SEC alleges Kumar misappropriated more than $5.6 million from Future Fractal and more than $1.3 million from Arcane by transferring fund assets to personal accounts he controlled. According to the complaint, Kumar has repaid approximately $681,000 to investors. The Commission is seeking injunctive relief, disgorgement of ill-gotten gains with pre-judgment interest, civil penalties, and a five-year bar from participating in securities offerings and from acting as or being associated with any investment adviser.
No final determination has been made in the case.
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