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Crypto Instructor Faces SEC Charges for Faking $1.2M Hedge Fund Investment by Students

A crypto trading course instructor and his company have agreed to settle fraud charges with the U.S. Securities and Exchange Commission (SEC) for misleading 15 students into investing $1.2 million in a non-existent hedge fund.

Brian Sewell, the founder of the online American Bitcoin Academy, and his company, Rockwell Capital Management, were accused by the SEC of running a fraudulent scheme that targeted students who enrolled in his crypto trading course.

According to the SEC’s complaint, Sewell claimed that he would launch the Rockwell Fund, a hedge fund that would use artificial intelligence and crypto trading strategies to generate high returns for investors. He solicited investments from hundreds of his online students, promising them access to the fund and its profits.

However, the SEC alleged that Sewell never launched the fund nor executed the trading strategies he advertised. Instead, he held on to the invested money in bitcoin, which was later stolen when his digital wallet was hacked and looted.

The SEC also alleged that Sewell lied to his investors about the fund’s performance, the amount of assets under management, the identity and qualifications of the fund’s managers, and the fund’s regulatory status.

The SEC’s Director of Enforcement, Gurbir S. Grewal, said in a statement: “We allege that Sewell defrauded students in his online American Bitcoin Academy of over a million dollars through a series of lies about investment opportunities in his purported crypto hedge fund. Among other things, he falsely claimed that his investment strategies would be guided by his own ‘artificial intelligence’ and ‘machine learning’ technology which, like the fund itself, never existed.”

He added: “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’s complaint, filed in U.S. District Court for the District of Delaware, charged Sewell and his company with violating antifraud provisions of the federal securities laws. The defendants have agreed to settle the charges without admitting or denying the allegations. They have consented to injunctive relief and monetary penalties. Rockwell Capital Management agreed to pay disgorgement and prejudgment interest totaling $1,602,089 and Sewell agreed to a civil penalty of $223,229. The settlement is subject to court approval.

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