The Securities and Exchange Commission (SEC) has filed a lawsuit against Krish Kumar, manager of Future Fractal Investments LLC and Arcane Resonance Fund, LLC.

The SEC’s complaint, submitted at the Oklahoma Northern District Court on March 26, 2026, alleges that from approximately January 2024 through February 2025, Kumar, a college student from Tulsa, Oklahoma, raised approximately $7.8 million through Future Fractal and Arcane, based on materially false and misleading representations.

Over 13 months, Kumar offered and sold membership interests in both Funds to approximately two dozen investors, nearly all of whom sent their investments to bank and brokerage accounts in the name of Future Fractal. Of the approximate $7.8 million raised from investors, Kumar, while at all times acting as an investment adviser, misappropriated nearly $7 million of the Funds’ collective assets by transferring them to personal accounts he controlled.

Prior to misappropriating Future Fractal’s assets, Kumar placed trades that were inconsistent with the Future Fractal trading strategy that he had marketed to investors when soliciting their investments.

In offering materials, communications to investors and prospective investors, and in-person meetings, Kumar made numerous materially false and misleading representations about fundamental aspects of Future Fractal, including that he would employ an investment strategy based on a proprietary algorithmic options trading strategy that he created and back-tested.

Investors sent their funds to bank and brokerage accounts in the name of Future Fractal. After trading in Future Fractal’s brokerage account for approximately four weeks, Kumar subsequently transferred the majority of those funds to a brokerage account in his own name, which he did not disclose to investors.

Starting on Future Fractal’s second day of active trading on or about January 30, 2024, and continuing through February 2024, Kumar made increasingly risky trades in securities other than Index-Based ETF A and Index-Based ETF B contrary to his representations to investors that he would only trade in those two ETFs and that he would employ his purported proprietary algorithmic options trading strategy.

Further, Future Fractal did not generate a return of 15.7% during its first week of trading; in fact, Future Fractal lost approximately $470,000 of the Fund’s assets trading outside of its investment strategy by the end of February 2024.

Beginning in or around late February 2024, through early March 2024, Kumar transferred more than $5.6 million of Future Fractal’s funds to personal accounts he controlled, including $5.4 million that he transferred to his own personal brokerage account and $250,000 that he transferred to a nominee account he controlled and that was not in the name of Future Fractal.

And after transferring most of Future Fractal’s assets into personal accounts he controlled, Kumar continued to place trades that were inconsistent with the trading strategy he had marketed to investors in soliciting their investments, resulting in virtually a total loss of Future Fractal’s assets.

Over the course of four trading days in mid-March 2024, Kumar lost approximately 98% of the Future Fractal assets that he had transferred into his personal accounts by executing trades that were outside the represented investment strategy for Future Fractal, investing the vast majority of the funds in Issuer A, a publicly traded crypto-asset technology company focused on Bitcoin mining.

After these trades resulted in a nearly complete loss, Kumar then lied to investors about what caused the loss, providing them with fabricated trading records and telling them the loss was due to a combination of trades made within Future Fractal’s represented investment strategy and the failure of a non-existent stop-loss order to prevent further losses.

Beginning in May 2024, Kumar solicited mostly new investors to invest in a second fund, Arcane, which purported to invest in crypto assets, equities, and options. Kumar again made materially false and misleading representations to investors about Arcane’s investment strategy and risk limits. Specifically, Kumar claimed in offering materials, among other things, that the “worst case expected return” was 1.2x (which represented a 20% gain to the investors), and that 99% of Arcane’s assets would be used for investment purposes.

Further, Kumar orally represented to an investor prior to his investing that the maximum risk of loss was 10-20% of Arcane’s capital, while at least 80% of Arcane’s assets would be held in cash. In addition, Kumar told an Arcane investor that his prior fund had earned a 30-40% return, even though the only prior fund he managed—Future Fractal—did not yield a positive return, much less a 30-40% return.

In total, Kumar and Arcane raised approximately $1.8 million from 10 investors, of which at least $300,000 was used to make unauthorized payments to a Future Fractal investor for losses sustained in Future Fractal—a separate fund—along with a $20,000 payment to satisfy a debt Kumar owed to a third party unrelated to the Funds.

After making these unauthorized payments, Kumar transferred the remaining Arcane assets—approximately $1.3 million—to his personal accounts, which he did not disclose to investors.

The SEC accuses Kumar of violations of the antifraud provisions of the federal securities laws; specifically, Section 17(a) of the Securities Act of 1933 [15 U.S.C. § 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

In addition, Kumar allegedly violated Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 [15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].

The Commission seeks (a) injunctive relief; (b) disgorgement of ill-gotten gains; (c) pre-judgment interest on those ill- gotten gains; (d) a civil penalty; and (e) all other equitable and ancillary relief to which the Court determines that the Commission is entitled.