In a parallel criminal action, Russell is charged with one count of wire fraud. If convicted, he faces a maximum penalty of 20 years in prison.
The Commodity Futures Trading Commission today filed a civil enforcement action against NY resident Rashawn Russell for fraudulently soliciting retail investors to invest in a digital asset trading fund and misappropriating at least $1 million in investor assets.
The fraud allegedly dates back to the period between November 2020 and July 2022. According to the CFTC, the defendant solicited retail investors to contribute bitcoin, ether, and fiat currency to invest in his purported proprietary digital assets trading fund. Russell guaranteed no losses to investors and, in some instances, a minimum 25 percent return on investment.
The financial watchdog claims that Russell:
- intentionally and/or recklessly made false and misleading statements regarding the fund’s structure, size, and performance;
- traded little, if any, of the money and digital assets as represented;
- falsely promised to pay withdrawal requests, including falsely promising that he would pay investors in the stablecoin USDC.
The CFTC further alleges that at least $1 million in investor assets have been misappropriated and used, among other things, to pay personal expenses, entities associated with gambling activities, and Ponzi-like payments to current investors.
The regulator seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
CFTC Director of Enforcement Ian McGinley said: “As today’s action demonstrates, the CFTC is unrelenting in holding bad actors accountable and protecting retail investors from fraud in the digital asset space.”
In a parallel criminal action, Russell is charged with one count of wire fraud. If convicted, he faces a maximum penalty of 20 years in prison.
The former investment banker was a registered broker with the Financial Industry Regulatory Authority, and was arrested yesterday in Brooklyn, New York, on criminal charges related to his alleged role in operating a cryptocurrency investment fraud scheme.
According to the indictment, the 27-year-old promised pitched his R3 Crypto Fund to colleagues and friends, promising guaranteed returns, sometimes up to 25%.
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