In a recent development, the founder of Rockwell Capital Management, Brian Sewell, is now under investigation by the U.S. Securities and Exchange Commission (SEC) for allegedly misleading 15 students into investing $1.2 million in a non-existent hedge fund. The SEC claims Sewell, who initially resided in Hurricane, Utah, before relocating to Puerto Rico, encouraged investors to deposit funds from early 2018 to mid-2019, promising lucrative returns through cutting-edge technology.
According to the SEC statement, Sewell never launched the promised hedge fund nor implemented the trading strategies he advertised. The complaint alleges that he received approximately $1.2 million from his students without fulfilling his promises.
SEC’s Swift Response
Sewell had allegedly pledged to employ artificial intelligence (AI) and machine-learning technology to maximize returns for investors. However, he left the funds parked in Bitcoin instead of executing the promised strategies. Subsequently, his crypto wallet fell victim to hacking, resulting in the complete loss of the investors’ funds.
The SEC issued a stern warning to potential scammers in the crypto industry, vowing to take action against those who exploit the hype surrounding technologies like AI and crypto. Rockwell Capital Management has agreed to return the entire $1.2 million to the defrauded investors, along with prejudgment interest amounting to approximately $402,000. Pending court approval, Sewell is expected to pay a civil penalty of $223,229.
This incident follows a cautionary message from another U.S. regulator, the Commodities and Futures Trading Commission (CFTC), urging crypto investors in 2024 to exercise caution and avoid falling for exaggerated promises made by AI trading bots.
The CFTC warned against those promoting substantial returns through bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technologies. Investors must remain vigilant and conduct thorough due diligence before entrusting their funds to crypto-related investment opportunities.