Rashawn Russell, a former Deutsche Bank investment banker, has pleaded guilty to a fraudulent crypto scheme that bilked investors out of $1.5 million.
The 27-year-old operator of the R3 Crypto Fund faces up to 30 years in prison for his crimes, which spanned from November 2020 to August 2022.
Crypto Scheme Perpetrator Faces Hefty Prison Sentence
Russell leveraged his reputation as a licensed financial broker to lure 29 investors into his crypto fund. He falsely promised large, and sometimes guaranteed, returns from cryptocurrency investments.
However, instead of investing the funds as promised, Russell misappropriated much of the investors’ assets for personal benefit. These benefits include gambling and repaying earlier investors.
United States Attorney Breon Peace stated,
“Russell leveraged investor interest in cryptocurrency markets to perpetrate a scheme to defraud clients who trusted him.”
This case underscores the commitment of the Office to hold bad actors in crypto markets accountable.
In addition to the investment fraud, Russell also pleaded guilty to a separate identity theft scheme. From September 2021 to June 2023, he fraudulently obtained more than fifteen credit cards and other access devices in the names of third parties, intending to use them for unauthorized transactions.
Read more: 15 Most Common Crypto Scams To Look Out For
A Widespread Problem
This case is not an isolated incident in the crypto market, and it highlights the need for vigilance among investors. The SEC has pursued several cases of affinity fraud, scams that exploit the trust of community members.
One such case involved a resident of Richmond, California. They raised $11.8 million from over a thousand investors through a bogus securities offering dubbed “Tongi Tupe.”
As part of his plea agreement, the court ordered Russell to pay more than $1.5 million in restitution. The case is being handled by the Business and Securities Fraud Section of the United States Attorney’s Office for the Eastern District of New York. It also includes the Department of Justice‘s Criminal and Fraud divisions.
“The Postal Inspection Service proudly protects Americans from ever-evolving threats of fraud,” stated USPIS Inspector-in-Charge Shen. He added:
“This case showcases our dedication to bring to justice those who violate their fiduciary duty to their clients.”
This conviction is a stark reminder of the risks associated with cryptocurrency investments. It also highlights the importance of due diligence before investing in any financial venture.
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