The Securities and Exchange Commission (SEC) has unveiled a fraudulent scheme orchestrated by Brian Sewell and his company, Rockwell Capital Management, which preyed upon students of Sewell’s online crypto trading course, the American Bitcoin Academy. This scheme, which promised innovative investment opportunities in a non-existent crypto hedge fund, ultimately defrauded 15 students out of $1.2 million, highlighting the dangers lurking in the speculative world of cryptocurrency investments.
From early 2018 to mid-2019, Sewell enticed his students with the prospect of investing in the Rockwell Fund, a hedge fund he claimed would leverage artificial intelligence and sophisticated crypto asset trading strategies to generate substantial returns. However, the SEC’s complaint paints a starkly different picture. Sewell initially resided in Hurricane, Utah, before moving to Puerto Rico, collected approximately $1.2 million from 15 students but failed to launch the fund or implement any of the promised trading strategies. Instead, the funds, held in Bitcoin, were eventually lost in a hack of Sewell’s digital wallet, leaving investors with nothing.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the deceit at the heart of Sewell’s operation, stating, “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.” Grewal’s statement serves as a reminder of the SEC’s commitment to pursuing those who exploit emerging technologies like artificial intelligence and cryptocurrency to commit fraud.
The legal action taken by the SEC in the U.S. District Court for the District of Delaware charges Sewell and Rockwell Capital Management with violating antifraud provisions of the federal securities laws. In a settlement that does not include an admission or denial of the allegations, the defendants have consented to injunctive relief, with Rockwell Capital Management agreeing to pay disgorgement and prejudgment interest totaling $1,602,089, and Sewell facing a civil penalty of $223,229. This settlement, pending court approval, marks a significant step in holding the defendants accountable for their actions.
The SEC’s investigation, led by a dedicated team from the Philadelphia Regional Office, underscores the agency’s vigilance in protecting investors from fraudulent schemes, especially those touting the use of advanced technologies to attract investment. The SEC’s Office of Investor Education and Advocacy has issued a warning urging investors to conduct thorough background checks on individuals and companies offering investment opportunities and to research investment prospects independently before committing funds.
This case is a cautionary tale for investors, particularly those drawn to the allure of high returns through new and often unproven technologies. It reinforces the importance of skepticism and due diligence in the face of investment opportunities that seem too good to be true. As the landscape of investment fraud evolves with technological advancements, the SEC remains a critical watchdog dedicated to safeguarding investors’ interests and maintaining the financial markets’ integrity.
