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A crypto trading course instructor has been charged by the US securities regulator with defrauding 15 students. He allegedly convinced them to invest a total of $1.2 million in a hedge fund that promised profits. Despite claiming to use cutting-edge technology, he reportedly never launched the investment fund.
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According to a recent statement released by the US Securities and Exchange Commission (SEC), Brian Sewell, the founder of Rockwell Capital Management, solicited investors to fund a non-existent hedge fund from early 2018 to mid-2019:
“The complaint alleges that Sewell, who resides in Hurricane, Utah, and later relocated to Puerto Rico, raised approximately $1.2 million from about 15 students but never launched the fund and did not trade using the trading strategies he advertised to investors.”
Allegedly, he promised to use artificial intelligence (AI) and machine learning technology to maximize investors’ returns. However, he parked his students’ funds in Ethereum and eventually the virtual wallet was hacked, leading to a total loss of their investments.
Crypto Teacher Stole $1 Million
“The complaint alleges that the Ethereum was ultimately stolen when Sewell’s digital wallet was hacked and emptied,” the statement noted.
The SEC issued a broader warning to scammers in the cryptocurrency industry, stating that they are intent on taking action against those who exploit the excitement of the sector.
“Whether it’s AI, crypto, decentralized finance (DeFi), or another trendy term, the SEC will continue to hold accountable those who misuse emerging technologies to deceive and defraud investors,” the SEC further stressed.
Rockwell Capital Management has agreed to repay $1.2 million to investors, along with approximately $402,000 in prejudgment interest.
If the court approves the settlement, Sewell will pay a civil penalty of $223,229 on his own.
This comes after another US regulator, the Commodity Futures Trading Commission (CFTC), warned cryptocurrency investors seeking significant returns this year to be wary of being scammed by AI trading bots with exaggerated promises.
The CFTC highlighted those who promise impressive returns using bots, trading signal algorithms, virtual asset arbitrage algorithms, and other AI-powered technologies.
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