American Bitcoin Academy Founder Faces Crypto Fraud Charges

Table of Contents

• Misleading Students to Invest
• SEC Charges Sewell with Fraud
• SEC Chair Warns of Crypto Fraud
• Lawmakers Seek to Reverse SEC Crypto Rule

Brian Sewell, the founder of the American Bitcoin Academy, was charged with crypto fraud by the U.S. Securities and Exchange Commission (SEC) on February 2, 2022.

Misleading Students to Invest

According to the SEC complaint, Sewell convinced students at his academy to invest in Rockwell Capital Management, a crypto hedge fund that he claimed used artificial intelligence for high returns. Sewell received approximately $1.2 million in investments from 15 students between April and June 2021.

However, Sewell did not actually launch the fund. Instead, he converted the students’ investments into Bitcoin and later claimed the digital wallet containing the funds was compromised, resulting in a loss of the entire amount.

SEC Charges Sewell with Fraud

The SEC accused Sewell and his company Rockwell Capital Management of defrauding investors through multiple misrepresentations in a 16-slide pitch deck that Sewell used to solicit investments. This included falsely claiming to hold data science degrees from prestigious universities like Johns Hopkins University and Stanford University, as well as lying about overseeing a crypto hedge fund that grew from $250,000 to $9 million when he had no prior experience managing a hedge fund.

To resolve the SEC’s charges, Rockwell Capital Management agreed to pay $1.6 million in disgorgement, prejudgment interest, and penalties, while Sewell will pay $223,229 in disgorgement, prejudgment interest, and penalties.

SEC Chair Warns of Crypto Fraud

SEC Chair Gary Gensler warned that the case highlights the prevalence of “old-fashioned fraud dressed up in today’s technology” in the cryptocurrency industry.

Lawmakers Seek to Reverse SEC Crypto Rule

This case comes as lawmakers like Representatives Wiley Nickel and Mike Flood, and Senator Cynthia Lummis seek to repeal the SEC’s interpretive release SAB 121 through a Congressional Review Act resolution. SAB 121 imposes restrictions on banks holding clients’ crypto assets and requires the assets be included on balance sheets. The lawmakers argue it challenges the legal force of the SEC's authority over crypto.

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