The Founder of the American Bitcoin Academy is facing scrutiny from the Securities and Exchange Commission (SEC) over allegations of fraud targeting his students.
Based in Hurricane, Utah, and later Puerto Rico, Brian Sewell enticed hundreds of students into investing in his Rockwell Fund. He touted groundbreaking investment strategies based on artificial intelligence and machine learning, promising lucrative returns in the volatile crypto market, the regulator said.
Unmasking a Fraudulent Scheme
However, investigations revealed that Sewell never launched the fund nor implemented the advanced technologies he flaunted. TheSEC alleged that 15 students, lured by Sewell's promises, had invested $1.2 million into the non-existent hedge fund.
Gurbir Grewal, the Director of the SEC's Division of Enforcement, mentioned: "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."
"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. 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."
Failure to Safeguard Investments
Instead of fulfilling his commitments, Sewell purportedly retained the funds in Bitcoin, which were subsequently stolen when his digital wallet fell victim to hacking. The SEC's complaint, filed in the U.S. District Court for the District of Delaware, charges Sewell and Rockwell Capital Management with violating antifraud provisions of federal securities laws.
According to the securities watchdog, Sewell and his company consented to injunctive relief without admitting or denying the allegations. Rockwell Capital Management agreed to pay $1,602,089 in addition to prejudgment interest, while Sewell faces a civil penalty of $223,229, pending court approval.
Recently, the SEC attributed the unauthorized post declaring the approval of Bitcoin ETFs to a "SIM swap" attack involving an unauthorized transfer of a mobile phone number to a different device. This security breach, which occurred externally through a telecommunications network, sparked a widespread frenzy within the cryptocurrency sector.
This article was written by Jared Kirui at www.financemagnates.com.
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