A US federal court has ordered Rashawn Russell, a New York resident, to pay over $1.5 million in restitution for orchestrating a fraudulent cryptocurrency trading scheme that deceived more than two dozen investors. 

The ruling, was handed down by the US. District Court for the Eastern District of New York, also permanently bans Russell from trading in any Commodity Futures Trading Commission (CFTC)-regulated markets for others and prohibits him from trading for himself for the next eight years.

The court’s decision, announced by the CFTC, concludes a case that exposed Russell’s misuse of investor funds, which were meant for digital asset trading but were instead diverted for personal expenses, gambling activities, and Ponzi-like payments.‍

A Web of Lies and Misappropriation

Between November 2020 and August 2022, Russell operated a fraudulent digital asset trading scheme, luring retail investors with promises of high returns through his so-called proprietary crypto trading fund. 

According to the CFTC, he misrepresented the fund’s size, structure, and profitability to gain and maintain investor trust. Instead of executing trades as promised, Russell misappropriated over $1.5 million in client funds, using them for personal expenses and illicit payouts to other investors in an attempt to sustain his scheme.

The CFTC charged Russell with fraudulent solicitation and misappropriation of investor assets in April 2023. The court’s latest order not only enforces financial restitution but also bars him from ever registering with the CFTC or engaging in any commodity trading activities for third parties.

Russell’s fraudulent activities also led to criminal charges. In September 2023, he pleaded guilty to one count of wire fraud related to his crypto scheme and one count of access device fraud for separate misconduct. He was sentenced to more than three years in prison, followed by three years of supervised release, and was ordered to pay full restitution to his victims.