The U.S. Securities and Exchange Commission (SEC) has leveled charges against Brian Sewell, founder of the American Bitcoin Academy, over a fraudulent cryptocurrency scheme.
In a Feb. 2 press release, the regulator claimed Brian Sewell’s scheme had siphoned approximately $1.2 million from students keen on learning about cryptocurrency investing.
At the heart of the case is the Rockwell Fund, a hedge fund Sewell claimed would leverage advanced technologies like AI and bespoke trading strategies with crypto assets to deliver impressive returns to its investors.
According to the SEC, from early 2018 to mid-2019, Sewell’s course, purportedly aimed at demystifying the complexities of Bitcoin (BTC) trading, became a funnel for inducing his students to invest in the non-existent Rockwell Fund.
Sewell, originally from Hurricane, Utah, and later a resident of Puerto Rico, gathered sizeable investments from 15 students with promises of substantial profits through his supposedly cutting-edge fund.
However, the entrepreneur never deployed the strategies and sophisticated tools he advertised, and the fund never took off. Instead, Sewell used the money received from the students to buy Bitcoin for himself.
In an ironic twist, Sewell’s digital wallet, holding the Bitcoin he’d bought, was hacked, leading to a complete loss of the funds.
The SEC’s Division of Enforcement Director, Gurbir S. Grewal, underscored the egregious nature of Sewell’s conduct, pointing out the orchestration of lies to defraud students and the misuse of technological buzzwords like AI and crypto to deceive investors.
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.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement
Both Sewell and the ABA have agreed to settle the charges without admittance or denial of the SEC’s allegations, and they have consented to injunctive relief.
Notably, the SEC has mandated Rockwell Capital Management to disgorge its ill-gotten gains plus prejudgment interest totaling $1.6 million, while Sewell faces a civil penalty worth over $223,000, pending court approval.
The agency pointed out that the case was a stark reminder to potential investors of the importance of exercising due diligence and verifying the credibility of investment opportunities, especially those that tout the allure of new and emerging technologies like AI and cryptocurrency.