A former broker and investment banker pled guilty to fraud in connection with a purported crypto investment fund that he used to dupe clients.
Earlier this year, Rashawn Russell, a former rep with Deutsche Bank Securities Inc. in New York, was charged with wire fraud for his role in defrauding investors of at least US$1.5 million in his R3 Crypto Fund.
According to U.S. authorities, instead of investing clients’ money as promised in various crypto assets, much of the money was “misappropriated by Russell and used for his personal benefit, to gamble, and to repay earlier investors.”
In federal court in Brooklyn, Russell pled guilty for his role in the investment fund scheme, and to a separate identity theft scheme.
“Russell leveraged investor interest in cryptocurrency markets to perpetrate a scheme to defraud clients who trusted him,” said Breon Peace, U.S. attorney for the Eastern District of New York, in a statement.
“The swift conviction in this case underscores this office’s commitment to holding bad actors in the digital asset markets accountable,” he said.
Earlier this year, Russell was also banned by the U.S. Financial Industry Regulatory Authority (FINRA) for failing to cooperate with the self-regulatory organization, which had suspended him.
The U.S. Commodity Futures Trading Commission (CFTC) has also filed civil charges against him in parallel with the criminal case.
In its litigation against Russell, the CFTC is seeking restitution, disgorgement, civil monetary penalties and permanent trading and registration bans.
As part of his plea deal in the criminal case, he must pay restitution to harmed investors, and faces jail time when he’s ultimately sentenced.