By Tom Blitzer
Key Insights:
- SEC charged Brian Sewell and Rockwell Capital Management with fraud over a fake crypto hedge fund, leading to a $1.6 million settlement.
- Sewell’s fraudulent scheme involved promising AI-driven returns from a non-existent fund, deceiving 15 students into investing over $1.2 million.
- Claims of Sewell’s academic achievements and prior fund management success were false, with no real AI or crypto trading strategies developed.
Brian Sewell, the founder of the American Bitcoin Academy, has been charged with fraud by the Securities and Exchange Commission (SEC) and its company, Rockwell Capital Management. Sewell, 51, is charged with defrauding students into investing in a fake crypto hedge fund, claiming artificially intelligent-driven returns.
The scheme netted over $1.2 million from 15 students, ending in a significant loss when the digital wallet holding the investments was hacked. This case has culminated in a settlement where Rockwell Capital Management will disburse $1.6 million, and Sewell himself will pay $223,229, neither admitting nor denying the charges.
Promises of High-Tech Returns
The heart of Sewell’s pitch was a hedge fund, dubbed the Rockwell Fund, which he claimed would leverage AI and crypto trading strategies for profit. The SEC’s investigation found these assertions baseless, with no such technology or fund ever being developed. The Division of Enforcement Director at the SEC, Gurbir S. Grewal, stated that the agency would continue prosecuting fraudsters using emerging technologies, such as AI and crypto, to defraud investors. This emphasis highlights the strictness of the SEC in defending investors’ interests amidst the dynamic digital asset sphere.
Sewell’s tactics included a 16-slide investor pitch deck filled with fabrications and omissions about the fund’s prospects and qualifications. He falsely claimed academic credentials from prestigious institutions such as Johns Hopkins University and Stanford University. Moreover, Sewell boasted of previous successes in managing a crypto hedge fund, allegedly turning $250,000 into $9 million, a claim the SEC has debunked, highlighting his lack of experience in fund management.
A Cautionary Tale of Trust and Verification
The story of Brian Sewell is a dire caution to investors about the risks of allowing money into the hands of unverified plans, especially those that exploit the attraction of high-tech investment strategies. SEC’s findings reflect a conscious effort to fool investors into thinking that Sewell is an expert and that the fund was legit, reiterating the need for due diligence.
Moreover, the proactive approach of the SEC in the Sewell case is illustrative of the SEC’s focus on protecting investors from fraudulent schemes in the digital assets sphere. By making individuals and entities pay for misleading investors, the SEC aspires to create a safer investment climate. This is a significant commitment to ensure investor confidence amidst growing technological innovation and the rise of digital assets investments.