“Crypto Investor Loses $1.2M to Fake Hedge Fund Managed by AI Teacher”

Crypto Trading Instructor Charged with Misleading Students into Investing $1.2 Million in Non-Existent Hedge Fund

A crypto trading course instructor is facing charges from the United States securities regulator for deceiving 15 students into investing a combined $1.2 million in a hedge fund that promised to utilize cutting-edge technology to generate lucrative returns. However, the founder of Rockwell Capital Management, Brian Sewell, allegedly never launched the investment fund and left his students’ funds parked in Bitcoin (BTC).

False Promises of AI and Machine Learning Technology

Sewell allegedly lured investors by claiming to use advanced AI and machine learning technology to maximize their returns. He even went as far as to assure them that their funds were in safe hands, but in reality, he never invested the money and it remained stagnant in BTC.

Hacked Crypto Wallet Leads to Total Loss of Investment

Despite his promises, Sewell’s lack of action and diligence ultimately led to the loss of his students’ entire investment. According to the U.S. Securities and Exchange Commission (SEC), his digital wallet was hacked and looted, resulting in the theft of the BTC.

SEC Warns Crypto Scammers Using AI and DeFi as Buzzwords

The Securities and Exchange Commission (SEC) has issued a warning to scammers in the crypto industry, specifically those exploiting the industry’s hype by using buzzwords such as “AI” and “DeFi”. The SEC stated its intention to take action against these individuals, emphasizing that it will hold them accountable for defrauding investors.

The SEC further noted that it will not only target those using “AI” and “DeFi” as buzzwords, but also those using other attention-grabbing technologies to lure investors into scams. This includes technologies such as artificial intelligence, web 3.0, chatbots, and more.

Rockwell Capital Management Agrees to Return Funds to Investors

In a recent case, Rockwell Capital Management has agreed to return $1.2 million back to investors, along with prejudgment interest of approximately $402,000. This settlement is subject to court approval.

The case involves the company’s founder, Sewell, who will also pay a civil penalty of $223,229 if the settlement is approved. The SEC has taken action against Sewell for his involvement in defrauding investors through the use of buzzwords and false promises.

The Commodities and Futures Trading Commission (CFTC) recently cautioned crypto investors to steer clear of exaggerated promises made by AI trading bots, as they search for significant returns in 2024.

The CFTC specifically called out those using bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technology, all of which claim to offer impressive yields.