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Rashawn Russell, a former investment banker at Deutsche Bank (ETR:DBKGn) and a registered broker, pleaded guilty to multiple counts of fraud on Wednesday, in relation to a fraudulent cryptocurrency trading scheme and a separate identity theft racket. The guilty plea could see Russell face up to 30 years in prison and he has been ordered to pay more than $1.5 million in restitution.
Russell was involved in operating a fraudulent crypto investment fund known as the “R3 Crypto Fund,” where he defrauded 29 investors out of $1.5 million between November 2020 and August 2022. He used his reputation as an investment banker and licensed financial broker to promise guaranteed, outsized returns on a series of crypto investments, according to a statement from the Department of Justice (DOJ) dated September 19.
The DOJ's investigation found that Russell had lied to investors about their investments and fabricated documents displaying false information concerning their returns. He also sent altered images of his bank balance to his investors, and in one instance, when an investor sought to cash in on one of their crypto investments, Russell never sent the money and instead sent his victim a fabricated money transfer confirmation.
Prosecutors revealed that most of the $1.5 million obtained from his victims was not used for investing in crypto assets as promised. Instead, Russell misappropriated these funds for personal benefit, gambling, and repaying earlier investors.
Apart from the investment fraud, Russell also pleaded guilty to his role in an identity theft scheme where he fraudulently obtained credit cards and other devices using false information with the intention of undertaking illegal and unauthorized transactions.
The case first gained public attention when initial charges were filed against Russell in April 2023. Since then, additional charges have surfaced, potentially extending his jail time by another decade.
The swift conviction underlines the commitment of authorities to hold accountable those who exploit the digital asset markets, according to the US Attorney for the Eastern District of New York, Breon Peace. The case serves as a stern reminder of the need for stringent oversight in digital asset markets and the consequences that bad actors face in these digital markets.
The guilty plea comes as a warning to investors to exercise caution and due diligence, especially in sectors like cryptocurrency, where regulation is still evolving.
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