CFTC Secures $1.5 Million Restitution Order Against New York Resident in Crypto Trading Fraud

The Commodity Futures Trading Commission (CFTC) announced that the U.S. District Court for the Eastern District of New York has entered an order against New York resident Rashawn Russell. The order resolves CFTC enforcement charges regarding Russell's fraudulent solicitation and misappropriation of investor funds intended for digital asset trading. Under the court order, Russell is required to pay more than $1.5 million in restitution to victims of the scheme. The court also imposed permanent bans prohibiting Russell from registering with the CFTC and from soliciting or trading in CFTC-regulated markets on behalf of others, alongside an eight-year ban on trading for his own account. Furthermore, the order permanently enjoins him from future violations of the Commodity Exchange Act and CFTC regulations. The regulatory action stems from an initial complaint filed in April 2023. The court found that between November 2020 and August 2022, Russell solicited over two dozen retail investors to deposit bitcoin, ether, and fiat currency into a purported proprietary digital assets trading fund. Russell made false and misleading statements concerning the fund's size, structure, and trading performance, while failing to trade the assets as represented and falsely promising to fulfill investor withdrawal requests. Rather than investing the capital as promised, Russell misappropriated more than $1.5 million in customer funds. The misappropriated assets were used to fund personal expenses, pay entities tied to gambling activities, and execute Ponzi-like payouts to existing investors. The civil resolution follows a parallel criminal case brought by the Department of Justice. In September 2023, Russell pleaded guilty to wire fraud and access device fraud, resulting in a prison sentence of over three years, three years of supervised release, and a criminal restitution order exceeding $1.5 million.