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A Utah federal judge sentenced Matthew Sewell, founder of American Bitcoin Academy, to three years in prison Wednesday for defrauding investors of $2.9 million and operating a $5.4 million unlicensed cryptocurrency exchange that converted cash for drug traffickers between 2017 and 2024.
Sewell, 54, pleaded guilty to wire fraud and running an unlicensed money transmitting business, crimes that prosecutors said exploited both retail investors seeking crypto returns and criminals seeking to launder illicit proceeds—underscoring federal authorities’ expanding crackdown on unregistered crypto financial services.
Court filings show that between December 2017 and April 2024, the American Bitcoin Academy founder raised more than $2.9 million from at least 17 investors by misrepresenting his background, experience, and ability to generate consistent returns.
Prosecutors said Sewell falsely claimed expertise in cryptocurrency markets and investment management, persuading victims to transfer funds under the promise of high-yield opportunities that never materialized.
“Sewell preyed on his victims by lying about his experience and promising returns he could not deliver, leaving individuals and families to bear the consequences of his deception,” — Robert Bohls, Special Agent in Charge, FBI Salt Lake City, said in a statement published by the Federal Bureau of Investigation.
Authorities said investor funds were misappropriated and used to sustain the scheme rather than invested as promised. The conduct, prosecutors argued, met the threshold for wire fraud due to the interstate electronic communications used to solicit and receive funds.
The case adds to a growing list of enforcement actions targeting individuals who exploit retail investors through crypto-themed investment offerings.
In a separate but overlapping scheme, prosecutors said the American Bitcoin Academy founder operated Rockwell Capital Management as an unlicensed money transmitting business between March and September 2020.
According to the Department of Justice, Sewell and his company converted bulk cash into cryptocurrency on behalf of third parties, including individuals engaged in fraud and drug trafficking, without registering with federal regulators or implementing required compliance controls.
“Sewell and his company converted bulk cash to cryptocurrency on behalf of third parties, including criminals engaged in fraud and drug trafficking,” — U.S. Department of Justice, in its sentencing statement.
Investigators determined that more than $5.4 million in cash was converted into cryptocurrency through the operation, bypassing safeguards designed to detect and prevent money laundering.
Federal authorities emphasized that the failure to implement know-your-customer and reporting obligations allowed illicit funds to move through the crypto ecosystem with minimal oversight which is a concern increasingly cited by U.S. regulators as digital assets gain broader adoption.
The sentencing follows earlier civil enforcement by the U.S. Securities and Exchange Commission, which charged the American Bitcoin Academy founder and Rockwell Capital Management in February 2024.
The SEC alleged that Sewell conducted fraudulent offerings and misled investors, though he neither admitted nor denied the findings as part of a settlement.
Under that agreement, Sewell and his firm were ordered to pay $223,229 in civil penalties and approximately $1.6 million in disgorgement and interest, according to the SEC’s litigation release.
After the civil case, a federal grand jury returned a criminal indictment, leading to Sewell’s arrest in Salt Lake City and eventual guilty plea.
The case arrives amid heightened federal scrutiny of crypto-related crime. In recent months, the DOJ has pursued multiple high-profile prosecutions involving illicit cryptocurrency transactions, including cases tied to unregistered money services and facilitation of criminal proceeds.
Notably, prosecutors have stressed that digital assets do not exempt operators from existing financial laws, particularly those governing money transmission, fraud, and anti-money laundering compliance.
For regulators and policymakers, the conviction of the American Bitcoin Academy founder reinforces a clear message: crypto-related businesses that operate outside licensing and disclosure requirements face escalating legal consequences.
As federal agencies continue coordinating enforcement efforts, officials say the case serves as both a warning to would-be offenders and a signal to legitimate market participants that regulatory compliance remains central to the future of the U.S. crypto sector.
