A cryptocurrency trading course instructor, Brian Sewell, is currently facing charges filed by the United States Securities and Exchange Commission (SEC) for allegedly deceiving 15 students into investing a total of $1.2 million in a hedge fund that never came to fruition.
Despite touting cutting-edge technology and promising substantial returns, Sewell is accused of misappropriating the funds for personal gain, without ever initiating the proposed investment fund.
According to the recent SEC statement, Sewell, the founder of Rockwell Capital Management, allegedly encouraged investors to deposit their money into a non-existent hedge fund from early 2018 to mid-2019.
The SEC complaint asserts that Sewell received approximately $1.2 million from the 15 students but failed to launch the fund or implement the trading strategies he had advertised to them.
Sewell had enticed potential investors by pledging to employ artificial intelligence (AI) and machine learning technology to optimize their returns.
However, he allegedly left their funds parked in Bitcoin, eventually leading to the loss of the entire investment when his crypto wallet was hacked and emptied.
The SEC’s statement underlines its commitment to taking action against individuals exploiting the cryptocurrency industry’s hype with misleading promises.
READ MORE: Tether Holdings Reports Remarkable Q4 2023 Profit of $2.85 Billion
It serves as a warning to potential scammers, stating, “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.”
In a significant development, Rockwell Capital Management has agreed to return the $1.2 million to the affected investors, along with prejudgment interest totaling approximately $402,000.
Pending court approval of the settlement, Sewell himself will be liable to pay a civil penalty of $223,229.
This incident follows a cautionary message from another U.S. regulator, the Commodities and Futures Trading Commission (CFTC), urging cryptocurrency investors in 2024 to exercise caution and avoid falling for exaggerated promises made by AI trading bots.
The CFTC specifically highlighted the risks associated with those who claim to deliver impressive returns through the use of bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technologies.
Investors are advised to exercise vigilance and conduct thorough due diligence before committing their funds to any cryptocurrency venture.
Discover the Crypto Intelligence Blockchain Council
