Rashawn Russell, a former investment banker at Deutsche Bank, is reportedly preparing to change his plea to guilty in a cryptocurrency fraud case. 

The 27-year-old from Brooklyn, who initially denied defrauding investors, is accused of soliciting investments from friends and colleagues and misusing the funds for personal expenses, including gambling. 

According to a Bloomberg report, the development sheds light on the alleged scheme. Russell posed as a licensed broker and promised investors significant returns through a cryptocurrency fund he claimed to manage. 

Accused Of Misappropriating Funds In Crypto Fraud

According to court records, Russell faces one count of wire fraud for his involvement in a scheme from November 2020 through August 2022. 

Per the report, prosecutors claim that Russell transferred a portion of the funds to a trading account but “misappropriated” the rest while providing investors with fabricated documentation about the performance of their investments. 

In April 2023, Russell was indicted by federal prosecutors in Brooklyn. After multiple postponements for plea negotiations, the case has been referred to a magistrate judge for a “change of plea hearing.”

The decision to change his plea suggests that Russell intends to plead guilty, according to an anonymous Bloomberg source familiar with the matter. 

The case represents another instance in the government’s efforts to combat cryptocurrency fraud, following recent guilty pleas by individuals involved in similar schemes. 

Eddy Alexandre, for example, pleaded guilty in February to a commodities fraud scheme involving his EminiFX cryptocurrency and foreign exchange platform.

While Deutsche Bank has not faced accusations of wrongdoing, Russell’s actions occurred during his tenure there. The institution has cooperated with law enforcement throughout the investigation. Additionally, Russell is facing a separate lawsuit filed by the Commodity Futures Trading Commission (CFTC), alleging defrauding of retail investors in a digital asset trading fund called “R3 Crypto Fund.”

Gambling And Identity Theft?

Additional complications have marked Russell’s time awaiting trial. Prosecutors accused him in June of violating the terms of his bond by visiting gambling establishments and using other individuals’ names to obtain credit cards and access gaming websites. 

Consequently, a federal magistrate ordered him to wear an electronic monitoring device and directed court officials to monitor his computer usage.

As the legal proceedings unfold, Russell’s plea change’s outcome might bring implications for the affected investors and the broader cryptocurrency industry.

At the time of writing, the leading cryptocurrency in the market, Bitcoin (BTC), is trading at $26,380, representing a 0.7% decline in the past 24 hours. However, it has maintained a 1.8% profit over the past seven days.

Featured image from iStock, chart from TradingView.com