In brief
- The SEC charged NAC Foundation, its CEO Marcus Andrade, and Jack Abramoff with conducting an illegal offering of AML Bitcoin.
- Abramoff was once considered the most powerful lobbyist in Washington.
The Securities and Exchange Commission today charged NAC Foundation, its CEO Marcus Andrade, and political lobbyist Jack Abramoff with conducting an illegal offering of AML Bitcoin, a cryptocurrency they touted as a better version of Bitcoin.
According to its press release, The SEC alleges that NAC Foundation raised at least $5.6 million from more than 2,400 investors by selling tokens that could later be converted to AML Bitcoin.
“AML” stands for anti-money laundering. The company claimed its "patent-pending technology" was better than Bitcoin because it was compliant with anti-money laundering and know-your-customer laws and could not be stolen.
But the SEC, which filed two separate complaints—one against the NAC Foundation and Andrade; another against Abramoff—asserted that in reality none of those capabilities existed and AML Bitcoin and its blockchain had barely been developed at all.
According to the regulator, Andrade falsely claimed that multiple government agencies, including the Panama Canal Authority and the Port of San Francisco, were negotiating to use AML Bitcoin, and both Andrade and Abramoff falsely claimed that they were advertising AML Bitcoin during the NFL Super Bowl in an effort to drum up interest in the offering.
The pair later claimed the NFL and NBC rejected the ad because it was “too political.” (The commercial, now on Youtube, shows North Korea trying unsuccessfully to hack the cryptocurrency.) But the SEC contends they never had the funds to pay for a $5 million Super Bowl ad in the first place.
Andrade’s attorney could not be reached for comment.
The SEC also claimed that Andrade “directed a market manipulation strategy” to pump up the token’s trading volume and price and diverted approximately $1.1 million from the offering for his personal use.
“We allege that these defendants repeatedly misled investors into funding non-existent technology, falsely claiming that the technology would make digital asset transactions more secure,” Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, said in a statement.
The US Attorney’s Office for the Northern District of California filed parallel criminal actions against Andrade and Abramoff, charging Andrade with wire fraud and Abramoff with conspiracy to commit wire fraud and lobbying disclosure violations.
Before his downfall, Abramoff was once considered the most powerful lobbyist in Washington. He served four years in prison after pleading guilty to charges related to bribing US government officials and was released in 2010.
According to the US attorney in San Francisco, Abramoff pleaded guilty to “a criminal conspiracy related to cryptocurrency and lobbying disclosure” and faces up to five years in prison, according to Bloomberg.