According to the United States SEC Brian Sewell allegedly never launched the crypto hedge fund that promised to use AI and other strategies for maximizing returns.
A crypto trading course instructor is facing charges from the United States securities regulator for misleading 15 students into investing a combined $1.2 million in a hedge fund that promised to generate lucrative returns. Despite claiming to use cutting-edge technology, he took the funds without ever launching the investment fund.
According to a recent statement published by the U.S. Securities and Exchange Commission (SEC), Brian Sewell, the founder of Rockwell Capital Management, allegedly encourag investors to place funds into a non-existent hedge fund from early 2018 to mid-2019:
“The complaint alleges that Sewell, who resided in Hurricane, Utah, before relocating to Puerto Rico, received approximately $1.2 million from 15 students but never launched the fund nor executed the trading strategies he advertised to investors.”
He allegedly promised to use artificial intelligence (AI) and machine-learning technology to maximize investor returns. However, he left his students’ funds parked in Bitcoin (BTC), and eventually, his crypto wallet was hacked, leading to the loss of their entire investment.
“The complaint further alleges that the bitcoin was eventually stolen when Sewell’s digital wallet was hacked and looted,” the statement declared.
The SEC issued a broader warning to scammers in the crypto industry, that it intends to take action against those exploiting the industry’s hype.
“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,” the SEC further noted.
Rockwell Capital Management has agreed to return the $1.2 million back to investors along with prejudgement interest of approximately $402,000.
If the court approves the settlement, Sewell himself will pay a civil penalty of $223,229.
This comes after another U.S. regulator, the Commodities and Futures Trading Commission (CFTC) warned aspiring crypto investors searching for significant returns this year to avoid being lured by exaggerated promises from AI trading bots.
The CFTC highlighted those promising impressive yields using bots, trade signal algorithms, crypto-asset arbitrage algorithms and other AI-assisted technology.