SEC Accuses Individual and Firm of Deceptive Cryptocurrency Trading “Academy” Fraud

An individual and his company were subject to legal action by the Securities and Exchange Commission (SEC), which accused them of conducting a fraudulent cryptocurrency trading tutorial.

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Brian Sewell, the principal of Rockwell Capital Management, along with his company, faced allegations of breaching the federal securities statutes’ anti-fraud regulations. The accused consented to a settlement over fraud accusations linked to their operations.

The deceptive activities were centered on the American Bitcoin Academy, an online cryptocurrency trading course created by Sewell. The SEC claims that due to the deceptive conduct, 15 participants were defrauded out of $1.2 million. Within the timeframe of early 2018 until the middle of 2019, Sewell is alleged to have persuaded many of his students to invest in a soon-to-be-established hedge fund, the Rockwell Fund. The complaint outlines that he professed to employ state-of-the-art tools including artificial intelligence as well as strategies for trading in crypto assets to secure profits for investors.

According to the SEC’s filings, Sewell, who initially resided in Hurricane, Utah before relocating to Puerto Rico, garnered an estimated $1.2 million from 15 pupils; however, he failed to initiate the fund or to carry out the investment methods he had promised. The accusation further states that the invested monies remained as bitcoin and were ultimately lost when Sewell suffered a hack of his digital wallet.

Gurbir Grewal, the SEC’s Division of Enforcement director, remarked, “We contend that Sewell swindled his American Bitcoin Academy online students, costing them in excess of a million dollars by perpetuating a series of untruths about the potential investment ventures in his alleged crypto hedge fund. Amongst the fabrications were false assertions about his supposed proprietary ‘artificial intelligence’ and ‘machine learning’ systems, which, as with the hedge fund, were non-existent. The SEC remains steadfast in its commitment to pursue those who employ trendy jargon, such as AI and crypto, to lure and cheat investors.”

While neither confirming nor refuting the complaint’s details, the respondents have agreed to accept the sanctioning of injunctive orders. Rockwell Capital Management concurred to reimburse investors, paying both disgorgement and pre-judgment interest totaling $1,602,089. Sewell has assented to pay a civil fine amounting to $223,229. The court must yet approve the settlement.

The SEC’s inquest into this matter was completed by Matthew Raalf, Jacquelyn King with additional help from Gregory Bockin, and Karen Klotz, all affiliated with the SEC’s Philadelphia Regional Office. The investigation was under the management of Assunta Vivolo, Scott Thompson, and Nicholas Grippo.