- The SEC charged Brian Sewell, founder of a crypto course, with defrauding students into investing in his nonexistent hedge fund by making false claims about returns, credentials, and AI technology.
- Sewell collected $12 million from students to invest in his “Rockwell Fund” but lost the money when his wallet was hacked. He never actually created the fund.
- The case shows the need to thoroughly vet crypto investments and be wary of claims that seem exaggerated or can’t be verified. Outsized returns and fake credentials are red flags.
The Securities and Exchange Commission (SEC) has charged the founder of an online cryptocurrency course with defrauding his students by getting them to invest in a nonexistent crypto hedge fund. The case highlights the need for investors to be wary of outsized investment claims.
Background on the Charges
The SEC accused Brian Sewell, the 51-year-old founder of American Bitcoin Academy, and his firm Rockwell Capital Management of fraud. According to the charges, Sewell encouraged his online crypto course students to invest in the Rockwell Fund, a crypto hedge fund he claimed would generate returns using AI and crypto trading strategies.
Sewell’s Fraudulent Claims
Sewell received around $12 million from 15 students but never actually launched the Rockwell Fund. The SEC said he made multiple false claims, including:
- Claiming the fund’s investments would be guided by his own AI and machine learning technology that did not actually exist.
- Falsely stating he had earned advanced degrees in data science from Johns Hopkins and Stanford.
- Lying about having previous experience managing a crypto hedge fund and turning $250,000 into $9 million.
Sewell Loses Investor Money
After collecting investments in bitcoin from students, Sewell subsequently lost the funds when his digital wallet was hacked, according to the SEC. Neither Sewell nor his firm admitted or denied the SEC’s charges.
Takeaways for Investors
The case highlights the need for investors to be skeptical of claims that seem too good to be true. Outsized investment returns should always raise red flags, as should credentials that can’t be verified. Thoroughly vetting any investment opportunity is essential.
This crypto course founder took advantage of his students’ trust, making completely fabricated claims about his qualifications, experience, and AI technology. The SEC is cracking down on such crypto investment schemes as it seeks to better protect investors in the space.