The US securities regulator has charged a cryptocurrency trading course teacher for deceiving fifteen students into depositing a total of $1.2 million in a hedge fund that offered profitable returns. He purportedly used cutting-edge technology, but he reportedly stole the money before the investment fund was even launched.
In a recent announcement, the U.S. Securities and Exchange Commission (SEC) said that Rockwell Capital Management’s founder, Brian Sewell, had urged clients to deposit money in a hedge fund that did not exist between the beginning of 2018 and the middle of 2019.
“The complaint alleges that 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.”
It is said that Sewell pledged to employ machine learning and artificial intelligence (AI) to optimize investor profits. Nevertheless, he kept his students’ money in Bitcoin, and finally, a breach into his cryptocurrency wallet caused them to lose their whole investment.
According to the statement, “the complaint further claims that the bitcoin was eventually stolen when Sewell’s digital wallet was hacked and looted.” The SEC warned scammers in the cryptocurrency space more broadly and threatened to take legal action against individuals who took advantage of the industry’s excitement.
The SEC added, “The SEC will continue to hold accountable those who claim to use attention-grabbing technologies to attract and defraud investors, whether it’s AI, crypto, DeFi, or some other buzzword.”
Rockwell Capital Management has consented to give investors their $1.2 million back plus an additional $402,000 in prejudgment interest.Should the settlement be approved by the court, Sewell will be responsible for $223,229 in civil penalties.
This comes after the Commodities and Futures Trading Commission (CFTC), another U.S. authority, cautioned cryptocurrency investors hoping for big profits in 2024 to stay away from artificial intelligence (AI) trading bots’ inflated claims.
The CFTC emphasized those offering remarkable returns through the use of AI-assisted technology, trading signal algorithms, crypto-asset arbitrage algorithms, and bots.