Release Number 8686-23
CFTC Charges New York Resident with Fraud and Misappropriation in Digital Assets Trading Scheme
April 11, 2023
Washington, D.C. — The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Eastern District of New York against New York resident Rashawn Russell. The CFTC’s complaint charges Russell with fraudulently soliciting retail investors to invest in a digital asset trading fund and with misappropriating at least $1 million in investor assets.
In its continuing litigation against Russell, the CFTC 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.
“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,” said Director of Enforcement Ian McGinley.
The complaint alleges that, from approximately November 2020 through July 2022, Russell 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. As alleged in the complaint, 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; and, falsely promised to pay withdrawal requests, including falsely promising that he would pay investors in the stablecoin USDC. At least $1 million in investor assets are alleged to have been misappropriated by Russell through his fraudulent scheme and used, among other things, to pay personal expenses, entities associated with gambling activities, and Ponzi-like payments to current investors.
Parallel Criminal Action
In a sealed indictment returned April 6, and unsealed today, Rashawn Russell was charged with one count of wire fraud in the Eastern District of New York, United States v. Rashawn Russell, Case No. 23-cr-00152 (E.D.N.Y.), for conduct similar to that alleged in the CFTC’s complaint.
The CFTC appreciates the assistance of the Department of Justice, Fraud Section.
The Division of Enforcement staff members responsible for this case are Rebecca Jelinek, Steve Turley, Tom Simek, Chris Reed, and Charles Marvine.
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Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.