The US Securities and Exchange Commission (SEC) has brought charges against Brian Sewell, founder of the US Bitcoin Academy, over a cryptocurrency fraud scheme.
In a press release dated February 2, the regulator claimed that Brian Sewell's scheme had drained nearly $1.2 million from students eager to learn about investing in cryptocurrencies.
At the heart of the case is the Rockwell Fund, a hedge fund that Sewell claimed would leverage advanced technologies such as artificial intelligence and customized trading strategies with crypto assets to generate amazing returns for its investors.
According to the SEC, from early 2018 to mid-2019, Sewell's course, purportedly intended to demystify the complexities of Bitcoin (BTC) trading, became a go-to for his students to invest in Rockwell's non-existent fund.
Sewell, originally from Hurricane, Utah, and later a resident of Puerto Rico, raised large investments from 15 students with promises of big profits through his supposedly sophisticated fund.
However, the entrepreneur never published the cutting-edge strategies and tools he advertised, and the fund never took off. Instead, Sewell used the money he received from students to buy Bitcoin for himself.
In an ironic development, Sewell's digital wallet, containing the Bitcoin he had purchased, was hacked, resulting in a complete loss of funds.
SEC Enforcement Division Director Gurbir S. Grewal underscored the egregious nature of Sewell's conduct, pointing to orchestrating lies to defraud students and misusing technology buzzwords like artificial intelligence and cryptocurrencies to deceive investors.
Whether it's AI, cryptocurrencies, challenge, or some other buzzword, the SEC will continue to hold accountable those who claim to use interesting technologies to lure and defraud investors.
Gurbir S. Grewal, Director of the SEC's Enforcement Division
Sewell and the American Bar Association agreed to settle the charges without admitting or denying the SEC's allegations and agreed to injunctive relief.
Notably, the SEC has ordered Rockwell Capital Management to disgorge its ill-gotten gains plus advance interest totaling $1.6 million, while Sewell faces a civil penalty of more than $223,000, pending court approval.
The agency noted that the case served as a stark reminder to potential investors of the importance of exercising due diligence and verifying the credibility of investment opportunities, especially those that promote the attractiveness of new and emerging technologies such as artificial intelligence and cryptocurrencies.
