DOJ seeks to stay CFTC proceedings against crypto fraudster Rashawn Russell
The United States Department of Justice (DOJ) is seeking to intervene in a lawsuit brought by the Commodity Futures Trading Commission (CFTC) against crypto fraudster Rashawn Russell.
On May 2, 2023, the DOJ submitted the relevant motion and supporting documents at the New York Eastern District Court.
The DOJ wants to intervene in the CFTC case and to stay civil proceedings because of the pendency of the parallel criminal case, United States v. Rashawn Russell, No. 23-CR-152, which has been filed in the same district. The same underlying facts are at issue in both the civil and the criminal matters.
Counsel for the Defendant Rashawn Russell has informed the government that Russell consents to the government’s motion to intervene and stay the Civil Case. The CFTC has informed the Government that it does not oppose this motion.
According to the Justice Department, the Court should issue a stay of proceedings because the government’s motion is timely, and the same alleged fraudulent schemes are at issue in both the Civil and Criminal Cases.
Moreover, a stay is necessary, as the defendant should not be permitted to use civil discovery in the Civil Case to avoid the restrictions on criminal discovery that would otherwise pertain to him in the Criminal Case.
A stay is also necessary to promote judicial economy.
Accordingly, the government requests that the Court: (1) permit the government to intervene pursuant to Federal Rule of Civil Procedure 24; and (2) order, pursuant to the Court’s inherent power, that proceedings in the Civil Case be stayed until the conclusion of the related Criminal Case.
The CFTC filed its complaint against Russell on April 11, 2023. The CFTC’s complaint charges Russell with fraudulently soliciting retail investors to invest in a digital asset trading fund and with misappropriating at least $1 million in investor assets.
The CFTC complaint alleges that, from approximately November 2020 through July 2022, Russell solicited retail investors to contribute bitcoin, ether, and fiat currency to invest in his purported proprietary digital assets trading fund. Russell guaranteed no losses to investors and, in some instances, a minimum 25 percent return on investment.
As alleged in the complaint, Russell intentionally and/or recklessly made false and misleading statements regarding the fund’s structure, size, and performance; traded little, if any, of the money and digital assets as represented; and, falsely promised to pay withdrawal requests, including falsely promising that he would pay investors in the stablecoin USDC.
At least $1 million in investor assets are alleged to have been misappropriated by Russell through his fraudulent scheme and used, among other things, to pay personal expenses, entities associated with gambling activities, and Ponzi-like payments to current investors.