SEC v. Krish Kumar — U.S. Securities and Exchange Commission Litigation Release No. 26507, dated March 27, 2026.
Krish Kumar, an Oklahoma resident, allegedly defrauded investors by making false representations about two investment funds he managed, Future Fractal Investments LLC and Arcane Resonance Fund, LLC. He raised approximately $7.8 million but misappropriated nearly $7 million, losing most of the assets through unauthorized and risky trades inconsistent with his stated strategies.
In Plain English
Imagine someone promising to invest your money safely in a specific way, like a carefully planned trip. Instead, they took most of your money, went on a wild, unplanned adventure with it, and lost almost all of it. They then lied about what happened and how the money was lost, making up stories about the trip to cover their tracks.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Promised a Safe Strategy Krish Kumar told investors he would manage their money using a special trading strategy he created. He claimed this strategy was designed to closely follow the S&P 500 or Nasdaq-100 using only two specific Index-Based ETFs. He also promised that any risk of loss would be capped at about 25% of their investment.
- Guaranteed Reimbursement Promise Kumar further assured investors that if the fund experienced a drawdown (loss) greater than 25%, they would be reimbursed up to 75% of their contributed capital. He also claimed Future Fractal had achieved a 15.7% return in its very first week of trading.
- Fundraising and Initial Trading From January 2024 to February 2025, Kumar raised about $7.8 million through two funds: Future Fractal Investments LLC and Arcane Resonance Fund, LLC. Investors sent their money to accounts in Future Fractal's name.
- Deviating from Strategy Soon after Future Fractal began trading (around January 30, 2024), Kumar started making increasingly risky trades in securities other than the promised ETFs. This was contrary to his representations that he would only trade those two specific ETFs and use his proprietary strategy.
- Misrepresenting Performance Contrary to his claims, Future Fractal did not achieve a 15.7% return in its first week. Instead, by the end of February 2024, the fund had lost approximately $470,000 due to trading outside the agreed-upon strategy.
- Misappropriating Funds Beginning in late February 2024, Kumar started transferring large sums of investor money to his personal accounts. He moved over $5.6 million from Future Fractal's funds, including $5.4 million to his own brokerage account and $250,000 to a nominee account he controlled.
- Further Risky Trading After moving the majority of Future Fractal's assets into his personal accounts, Kumar continued to make trades inconsistent with the marketed strategy. He invested most of these funds in Issuer A, a crypto-asset technology company, resulting in a loss of approximately 98% of the transferred assets within four trading days in mid-March 2024.
- Fabricating Records Following the near-total loss of Future Fractal's assets, Kumar lied to investors about the cause. He provided them with fabricated trading records and falsely claimed the losses were due to trades within the represented strategy and a failed stop-loss order for a non-existent trade.
- Soliciting Second Fund Starting in May 2024, Kumar began soliciting investors for a second fund, Arcane Resonance Fund, LLC. He again made materially false and misleading representations about Arcane's investment strategy and risk limits, which purported to invest in crypto assets, equities, and options.
- Misappropriating Arcane Funds Kumar also misappropriated nearly $7 million of the combined funds' assets by transferring them to personal accounts he controlled. This included using at least $300,000 from Arcane investors to make unauthorized payments to a Future Fractal investor for losses sustained in that fund.
The Enforcement Action
On March 26, 2026, the SEC filed settled charges against Krish Kumar for defrauding investors in two offerings. Kumar allegedly made materially false and misleading representations regarding Future Fractal Investments LLC and Arcane Resonance Fund, LLC. He raised approximately $7.8 million but misappropriated nearly $7 million, losing most of the assets through unauthorized trades. Kumar agreed to permanent injunctions, conduct-based injunctions, and monetary remedies to be determined by the Court.
Named in this action: Krish Kumar.