By Luc Cohen

NEW YORK (Reuters) -A former AG (NYSE:) investment banker has been charged in an indictment unsealed on Tuesday with misappropriating funds from investors whom he wooed with promises of big returns from cryptocurrency trading.

Rashawn Russell, 27, of Brooklyn, solicited investments from friends and colleagues but used the funds for gambling and other personal expenses, federal prosecutors said.

According to the indictment, Russell told prospective investors that he was a licensed broker who worked in investment banking and could help them earn large and sometimes guaranteed returns from R3, a cryptocurrency fund he claimed to run.

Prosecutors said Russell transferred some funds into a trading account but siphoned the rest, and sent fake documentation to investors about how their money was doing.

Russell, arrested on Monday in Brooklyn after being charged in a sealed indictment last Thursday, faces one count of wire fraud for a scheme that prosecutors said ran from November 2020 through August 2022. He pleaded not guilty at a Tuesday afternoon hearing in Brooklyn federal court.

A lawyer for Russell did not respond to a request for comment.

According to the indictment, Russell was an investment banker from July 2018 through November 2021 at a financial institution that was not identified in the document. His LinkedIn profile states that he became a Deutsche Bank (ETR:) investment banking analyst in July 2018 and was promoted to associate in July 2020.

U.S. prosecutors and regulators have been working to crack down on fraud involving digital assets.

"Russell turned the demand for cryptocurrency investments into a scheme to defraud numerous investors," Breon Peace, the U.S. attorney in Brooklyn, said in a statement.

Deutsche Bank said in a statement that while it would not comment on an ongoing legal proceeding, it "regularly supports law enforcement and regulatory oversight efforts, including appropriately responding to and cooperating with authorized investigations and proceedings."