In a recent development, a crypto trading course instructor, Brian Sewell, is facing charges from the United States Securities and Exchange Commission (SEC) for allegedly misleading 15 students into investing $1.2 million in a hedge fund that never materialized.
Sewell, the founder of Rockwell Capital Management, promised to employ cutting-edge technology, including artificial intelligence (AI) and machine learning, to generate lucrative returns for investors. However, he failed to launch the fund and left his students’ funds parked in Bitcoin, which was later stolen when his crypto wallet was hacked.
False promises and misleading claims
The SEC has filed a complaint against Brian Sewell, accusing him of encouraging investors to place their funds into a nonexistent hedge fund from early 2018 to mid-2019. Sewell, who initially resided in Hurricane, Utah, before relocating to Puerto Rico, allegedly received approximately $1.2 million from 15 students under pretenses.
He promised to utilize advanced technologies, particularly AI and machine learning, to execute trading strategies to maximize investor returns.
However, the complaint asserts that Sewell never launched the fund nor executed the advertised trading strategies. Instead, he left the investors’ funds parked in Bitcoin, ultimately losing their entire investment. The SEC’s investigation revealed that the Bitcoin holdings were stolen when Sewell’s digital wallet was hacked and looted.
SEC issues a warning to crypto scammers
In response to this case, the SEC has issued a broader warning to scammers operating within the cryptocurrency industry. The regulatory body intends to take decisive action against individuals and entities exploiting the hype surrounding the industry and making false claims about using innovative technologies.
The statement from the SEC reads, “Whether it’s AI, crypto, DeFi, or some other buzzword, the SEC will continue to hold accountable those who claim to use attention-grabbing technologies to attract and defraud investors.”
This stern warning highlights the SEC’s commitment to safeguarding investors and maintaining the integrity of the cryptocurrency market.
In a significant development, Rockwell Capital Management, the entity associated with Brian Sewell, has agreed to return the entire $1.2 million to the deceived investors, in addition to prejudgment interest totaling approximately $402,000. This restitution aims to compensate the affected individuals for their losses and is a significant step towards rectifying the situation.
Furthermore, if the court approves the settlement, Brian Sewell must pay a civil penalty of $223,229. This penalty is intended to hold Sewell personally accountable for his actions and deter him and others from engaging in similar fraudulent activities in the future.
CFTC’s warning to crypto investors
This recent case is a stark reminder of the risks associated with the cryptocurrency market and the potential for fraudulent activities. It is not the first time U.S. regulators have raised concerns about deceptive practices within the crypto space.
The Commodities and Futures Trading Commission (CFTC), another prominent U.S. regulatory body, has warned crypto investors. The CFTC cautioned investors to exercise caution and avoid falling for exaggerated promises from AI trading bots and other technology-driven schemes.
The CFTC specifically highlighted individuals and entities making unrealistic claims to generate impressive yields using AI-driven trading bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technologies.
This advisory emphasizes the need for investors to conduct thorough due diligence and exercise discretion when considering investment opportunities within the crypto industry.
Source: https://www.cryptopolitan.com/crypto-trading-course-instructor-faces-charges-for-misleading-students-and-losing-1-2m/