The man was charged with one count of wire fraud.
The U.S. Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against former Deutsche Bank investment banker Rashawn Russell in the U.S. District Court for the Eastern District of New York.
The document stated that Russell used fraudulent means to solicit retail investors to invest in digital asset trading funds. He is also accused of defrauding investors of nearly $1 million in the process, and the CFTC charged him with one count of wire fraud.
litigation
According to the press release, Russell asked retail investors to invest in Bitcoin, Ethereum, and fiat currencies in what he called a proprietary digital asset trading fund between November 2020 and July 2022, and he allegedly guaranteed that investors would not suffer any loss. In some cases, bankers also promise a minimum return on investment of 25 percent.
The complaint alleges that Russell intentionally and/or recklessly made false and misleading statements about the fund’s structure, size, and performance. He is also accused of falsely promising to pay withdrawal requests and to compensate investors in USDC.
The funds were then used to pay for Russell’s personal expenses, entities associated with his gambling activities, and Ponzi-style payments to current investors.
In its lawsuit against the individual, the commodities regulator seeks restitution, disgorgement, civil penalties, and permanent trading and registration bans, in addition to a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.
CFTC Enforcement Director Ian McGinley was quoted as saying,
“As today’s action demonstrates, the CFTC is relentless in holding bad actors accountable and protecting retail investors from fraud in the digital asset space.”
Comparative perspectives from the SEC and CFTC
The SEC has long maintained that certain crypto assets are securities. In contrast, the CFTC has emphasized that Bitcoin and Ethereum are commodities in its latest crypto fraud and misappropriation lawsuit.
“Certain digital assets, such as Bitcoin, Ethereum, and USDC, are included within the definition of “commodity” in section 1a(9) of the Act, 7 USC §1a(9), and contracts for their sale are subject to the prohibitions in section 6(c)(1) of the Act, 7 USC § 9(1), and regulation 180.1, 17 CFR § 180.1 (2022).”
The assertion comes a month after CFTC Chairman Rostin Behnam said ether and stablecoins should be considered commodities, a divergence from SEC Chairman Gary Gensler, who previously claimed that all crypto assets except bitcoin could be securities and therefore subject to his agency’s oversight.
The lawsuit also highlights the continued lack of consensus between the two institutions, leaving open the question of how regulators such as the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation view the asset class.
