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Crypto Course Creator Charged with Fraud

Published: Feb 03, 2024 | Last Updated: Feb 03, 2024
Howard Kane
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SEC targets Brian Sewell for duping students into a non-existent hedge fund, highlighting risks in crypto investments.

SEC Cracks Down on Crypto Course Founder for Fraudulent Hedge Fund Scheme

The U.S. Securities and Exchange Commission (SEC) has recently taken action against an individual in the cryptocurrency education space, highlighting the ongoing concerns over fraudulent activities in the burgeoning crypto market. Brian Sewell, the founder of American Bitcoin Academy, has been charged with deceiving his students into pouring money into a hedge fund that never really existed.

The Lure of High Returns with AI

Sewell, who also ran Rockwell Capital Management, attracted students from his online cryptocurrency course with the promise of a cutting-edge investment opportunity. He claimed that an artificial intelligence (AI) system would be employed to generate significant returns for investors. Approximately $1.2 million was collected from 15 students under this premise. However, the hedge fund was a mirage; it was never launched, and the money was never invested as promised.

The Consequences of Misleading Investors

The SEC's charges against Sewell and his firm have led to a settlement, where Sewell agreed to pay back $1.6 million and his firm, an additional $223,229. It's important to note that these payments were agreed upon without Sewell or his firm admitting to or denying the allegations brought against them by the SEC.

In a separate but related incident, Sewell's claims of using AI and machine learning to maximize investment returns were further discredited when it was revealed that the funds collected were left in Bitcoin and subsequently stolen from his digital wallet. This loss only added to the deception, as investors were led to believe their money was being actively managed using advanced technology.

Investor Education and Vigilance

This case serves as a stark reminder for investors to exercise due diligence when considering investment opportunities, especially within the relatively unregulated and often opaque world of cryptocurrency. The allure of high returns should be weighed against the risks, and the credibility of the investment and the person offering it should be thoroughly vetted.

The SEC's action also underscores the commitment of regulatory bodies to pursue fraudulent schemes in the crypto market. Investors are encouraged to report suspicious activities and to educate themselves on the signs of investment fraud.

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