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The SEC Presses Charges Against a Phony Crypto Trading Instructor in a $1.2 Million Hedge Fund Scam Case

How the fake hedge fund scandal unfolded

A crypto trading course instructor has been charged by the U.S. Securities and Exchange Commission (SEC) for orchestrating a fraudulent scheme that duped 15 students out of a staggering $1.2 million. The instructor, Brian Sewell, founder of Rockwell Capital Management, is accused of enticing students with the promise of high returns through an advanced hedge fund leveraging artificial intelligence (AI) and machine learning. 

However, these promises were empty. The SEC's statement exposes the heart of the deceit: 

"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." 

This case highlights a growing concern over the misuse of crypto investments and the allure of high-tech narratives in defrauding investors.

Statement stated:

“The complaint further alleges that the bitcoin was eventually stolen when Sewell’s digital wallet was hacked and looted,” 

The SEC's crackdown on crypto scams

The SEC is intensifying its efforts to purge the crypto industry of scams, especially those exploiting the hype around new technologies like AI and DeFi. In its crackdown, the commission underscores a clear warning against such fraudulent activities: 

"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." 

This stance is part of a broader regulatory response to safeguard investors, as demonstrated by the proposed settlement with Rockwell Capital Management. The company has agreed to reimburse the deceived investors the full $1.2 million, plus an additional $402,000 in prejudgment interest. 

Additionally, Sewell faces a substantial civil penalty, underscoring the financial and legal repercussions of exploiting investor trust. This incident serves as a cautionary tale and a reminder of the vigilance required in the volatile crypto market.