Investment banker indicted on crypto fraud, used money for gambling despite offering 'guaranteed' returns

A federal court has indicted a former investment banker and registered broker for defrauding numerous investors. The man allegedly used the money for his own benefit to gamble and pay off other debts.

According to the United States Attorney's Office for the Eastern District of New York, Rashawn Russell was arraigned on an indictment for perpetrating a cryptocurrency fraud scheme after being arrested in Brooklyn, New York, on April 10, 2023.

Court documents allege that Russell sometimes "guaranteed" large returns from the cryptocurrency investments, but his promises turned out to be empty.

Much of the investors' money was misappropriated by Russell and instead used to gamble and repay other investors.

Russell also allegedly lied to investors about their investment status and fabricated multiple documents that he sent to them. Russell altered an image of a bank balance on a banking website that he sent to one investor, which was meant to show "substantial liquidity," according to the U.S. Attorney's Office.

When another investor attempted to recoup his investment from Russell, instead of sending the money, he fabricated a wire transfer confirmation that supposedly showed the money was being returned.

"As alleged, Russell turned the demand for cryptocurrency investments into a scheme to defraud numerous investors in order to fund his lifestyle,” said Breon Peace, United States attorney for the Eastern District of New York.

“This Office will continue to aggressively pursue fraudsters perpetrating these schemes against investors in the digital asset markets," Peace added.

Russell is a former investment banker and was also a registered broker with the Financial Industry Regulatory Authority. If convicted, he faces a maximum of 20 years in prison.

According to the U.S. Attorney's Office, the charge in the indictment is still an allegation and Russell is presumed innocent until proven guilty beyond a reasonable doubt.

In late March 2023, the Securities and Exchange Commission charged a laundry list of celebrities for "illegally touting" crypto asset securities called Tronix and BitTorrent. Included in the mix were actress Lindsay Lohan, YouTube star and boxer Jake Paul, rappers Soulja Boy and Lil Yachty, and singers Akon and Ne-Yo.

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