On June 25, the United States Securities and Exchange Commission charged the issuer of AML Bitcoin — not to be confused with Bitcoin itself — with conducting a fraudulent offering. These charges follow up on a criminal filing in San Francisco from June 22.
AML Bitcoin’s story
Per the complaints, Rowland Marcus Andrade and his NAC Foundation raised upwards of $5.6 million in an initial coin offering (ICO) for AML Bitcoin beginning in August 2017 and continuing through 2018, amid the huge ICO boom of that time.
The criminal charges filed against Andrade in San Francisco on June 22 refer to a “Co-Schemer” who is never named in that complaint. The SEC’s charges today reveal that individual as Jack Abramoff, a notorious lobbyist who did prison time for corruption between 2006 and 2010.
The SEC allege that Abramoff aided Andrade with promotion that proved to be false. In addition to lying to investors about the technical development behind AML Bitcoin, Andrade also purportedly used millions of dollars in investor funds for personal expenses like his own house. Per the SEC:
“NAC and Andrade falsely claimed that multiple government agencies were negotiating to use AML BitCoin, and Abramoff and Andrade falsely claimed that they were on the verge of advertising AML BitCoin during the Super Bowl in an effort to create interest in the offering, despite NAC being unable to afford the cost of the ad.”
Anti-money laundering (AML)
AML Bitcoin’s advertisement was based on its compliance with government regulations including providing anti-money laundering support. Comically, the criminal charges in the indictment in San Francisco include one count of money laundering and one count of wire fraud, each of which carry up to 20-year sentences.
As crypto gains more mainstream acceptance, AML and know-your-customer laws are a major concern for institutions looking to comply with government mandates. The Financial Action Task Force, for example, have been busy for the past year working to get the international community on-board with new requirements for cryptocurrency exchanges to keep information on their customers.