The U.S. Securities and Exchange Commission (SEC) has charged the founder of American Bitcoin Academy, accusing him of running an online fraudulent crypto scheme that cost students $1.2 million. The defendant “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.”
SEC Charges Founder of Online Crypto Fraud
The U.S. Securities and Exchange Commission (SEC) announced Friday that it has charged the founder of American Bitcoin Academy “with fraud targeting students.” Brian Sewell and his company, Rockwell Capital Management, agreed to settle fraud charges in connection with a scheme, the regulator said, adding:
The SEC alleges that the fraudulent scheme cost 15 students $1.2 million.
The SEC alleges that, between early 2018 and mid-2019, Sewell encouraged hundreds of his online students to invest in the Rockwell Fund, a hedge fund he promised to launch. He claimed the fund would use advanced technologies like AI and crypto-asset trading strategies to generate returns for investors.
The securities watchdog further alleges that Sewell, who formerly resided in Utah before moving to Puerto Rico, received $1.2 million from 15 students for the Rockwell Fund. However, he never launched the fund or implemented the promised trading strategies. Instead, he held onto the invested money in bitcoin, which he claimed was stolen when his digital wallet was hacked.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, commented: “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.” The SEC official stressed:
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.
The SEC’s complaint charges the defendants with violating antifraud provisions of the federal securities laws. The defendants have agreed to settle the charges and have consented to injunctive relief without admitting or denying the allegations in the complaint. “Defendant Rockwell Capital Management also agreed to pay disgorgement and prejudgment interest totaling $1,602,089 and Defendant Sewell agreed to a civil penalty of $223,229. The settlement is subject to court approval,” the SEC detailed.