SEC charges founder of online cryptocurrency course for targeting students to invest in non-existent hedge funds
The founder of an online cryptocurrency course said he would generate profits using artificial intelligence to entice students to invest in cryptocurrency hedge funds, according to charges filed by the Securities and Exchange Commission.
The SEC said in a statement Friday that a founder who had been holding investors’ money in Bitcoin lost those funds after his digital wallet was hacked. The agency charged American Bitcoin Academy founder Brian Sewell, 51, and his company Rockwell Capital Management with fraud, reaching a settlement without admitting or denying the charges.
Sewell encouraged students to invest in the Rockwell Fund, a hedge fund that will use AI and cryptocurrency-related trading strategies to generate returns. Sewell received about $1.2 million from 15 students, but ultimately never got the fund started.
“Among other things, he falsely claimed that his investment strategies would be guided by his ‘artificial intelligence’ and ‘machine learning’ technology, which, like the funds themselves, never existed,” said SEC Division Director Gurbir S. Grewal. . “Whether it’s AI, cryptocurrency, DeFi or any other buzzword, the SEC will continue to hold accountable those who claim to be using attention-grabbing technologies to lure and defraud investors.”
To resolve the SEC’s charges, Rockwell Capital Management will pay $1.6 million and Sewell will pay $223,229, according to a statement from the SEC.
Other omissions
The SEC said Sewell emailed students a 16-slide investor presentation deck that contained numerous misstatements and omissions about the fund.
In that presentation material, Sewell said he had degrees in data science from John Hopkins University and Stanford University, but the SEC said this was false.
Sewell also told investors that he previously managed a cryptocurrency hedge fund, growing it from $250,000 to $9 million.
“Sewell’s statements were false. As Sewell well knew, he had no prior experience managing hedge funds,” the SEC said in its complaint.
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