Crypto teacher loses students’ $1.2M investment in fake hedge fund.

A crypto-trading course instructor is facing charges from the United States securities regulator after he misled 15 students into promising $1.2 million in hedge fund returns. It is said that he took the money without even starting the investment fund, even though he claimed to use modern technology.

Rockwell Capital Management founder Brian Sewell encouraged investors to put money into hedge funds from early 2018 to mid-2019, according to a recent filing with the US Securities and Exchange Commission (SEC).

“The complaint alleges that Sewell received approximately $1.2 million from 15 students before moving to Puerto Rico, where he lived in Hurricane, Utah, but did not initiate the funds or implement the marketing strategies he had introduced to investors.”

It is said to promise to use artificial intelligence (AI) and machine learning technology to boost investors' returns. But he left his students' money standing in Bitcoin (BTC) and eventually, his crypto wallet was hacked, causing them to lose their investment.

“The complaint eventually alleges that when Sewell's digital wallet was hacked and stolen, the bitcoins were stolen,” the statement said.

The SEC has issued a broad warning to fraudsters operating in the industry, expressing its intention to take action against those who exploit industry rumours.

“AI, crypto, DeFi or any other buzzword, the SEC continues to hold accountable the use of attention-grabbing technologies to lure and defraud investors,” the SEC said.

Related: UK Police May Be ‘Ill-equipped to Handle Crypto Crime' – Fraud Victim

Rockwell Capital Management agreed to pay back $1.2 million, plus pre-interest, about $402,000.

If the court approves the settlement, Sewell himself will pay $223,229 in civil penalties.

This comes as another US regulator, the Commodity and Futures Trading Commission (CFTC), has warned crypto investors not to be fooled by the inflated promises of AI trading bots looking to make big profits this year.

The CFTC has highlighted those amazing products using bots, trading algorithms, crypto-asset arbitrage algorithms and other AI-assisted technology.

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