How to Avoid Crypto Scams: Lessons from the American Bitcoin Academy Case

If you are interested in learning how to trade cryptocurrencies, you might be tempted by online courses that promise to teach you the secrets of success. However, before you sign up for any such course, you should do your due diligence and research the credentials and reputation of the instructor.

A recent case involving the founder of the American Bitcoin Academy (ABA), Brian Sewell, illustrates the importance of being careful when choosing an online crypto course. According to the Securities and Exchange Commission (SEC), Sewell scammed students out of more than $1 million by persuading them to invest in a fake hedge fund, the Rockwell Fund, which would supposedly use artificial intelligence and other advanced tools to trade digital assets.

The SEC alleged that Sewell lied to investors about the existence and performance of the fund, and instead converted their money into Bitcoin, which he lost when his wallet was hacked. He also sent them fake monthly account statements to cover up his fraud. Sewell and his company, Rockwell Capital Management, agreed to settle with the SEC without admitting or denying the allegations, and pay more than $1.8 million in penalties and disgorgement.

This case is not an isolated incident. Crypto scams are rampant in the industry, and they can take various forms, such as phishing, malware, fake ICOs, Ponzi schemes, pump-and-dumps, and more. According to a report by CipherTrace, crypto-related fraud and theft amounted to $4.5 billion in 2019, and $1.9 billion in 2020.

So how can you avoid falling victim to these scams? Here are some tips:

• Do your own research. Don't rely on testimonials, reviews, or endorsements from unknown sources. Check the background and reputation of the course instructor, the platform, and the fund manager. Look for evidence of their qualifications, experience, and track record. Verify their contact information and physical address. Search for any complaints or lawsuits filed against them.
• Be skeptical of unrealistic claims. If something sounds too good to be true, it probably is. Beware of courses that promise guaranteed returns, high profits, low risks, or secret strategies. Remember that crypto trading is volatile and risky, and there is no magic formula for success.
• Understand what you are investing in. Don't blindly follow the advice or recommendations of anyone without doing your own analysis and due diligence. Read the whitepaper, prospectus, or offering document of any fund or project you are considering investing in. Understand the risks, fees, terms, and conditions involved. Ask questions and seek clarification if something is unclear or suspicious.
• Use secure platforms and wallets. Only use reputable and regulated platforms and exchanges to buy, sell, or store your cryptocurrencies. Avoid unlicensed or unregistered entities that may not comply with anti-money laundering or consumer protection laws. Use secure wallets that allow you to control your own private keys and backup your recovery phrase. Protect your devices and accounts with strong passwords, encryption, antivirus software, and two-factor authentication.
• Report any suspicious activity. If you encounter or suspect any fraudulent or abusive behavior related to crypto trading or investing, report it to the relevant authorities as soon as possible. You can contact the SEC, the CFTC, the FBI, or your local law enforcement agency. You can also file a complaint with the Better Business Bureau or other consumer protection organizations.

By following these tips, you can reduce your chances of being scammed by online crypto courses or funds. Remember that crypto trading is not a get-rich-quick scheme, but a serious endeavor that requires education, research, discipline, and risk management.