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AML BitCoin: A Popular ICO Whose Touted Capabilities Do Not Exist
July 1, 2020
by Howard Haykin
If you like Bitcoin, you’ll love AML BitCoin, the new digital asset security brought to you by NAC Foundation, its CEO Marcus Andrade, and political lobbyist Jack Abramoff. The trio raised around $5.6 million from more than 2,400 investors by promoting the new digital asset security as a new and improved version of Bitcoin - with anti-money laundering, anti-terrorism, and theft-resistant technology built into the coin on NAC’s own “privately regulated public blockchain.”
But, according to the SEC, investors were defrauded because none of the touted capabilities existed and the development of AML BitCoin and its blockchain was in the very early stages.
HOW INVESTORS WERE DECEIVED. Marcus Andrade, the founder and CEO of NAC, was the primary architect and beneficiary of the offering, which he, Jack Abramoff and NAC promoted to prospective investors from mid-2017 through 2018. The tokens they offered and sold during the offering - including through an initial coin offering (“ICO”) phase - constituted a “security” under the federal securities laws.
According to the SEC, here’s where the Defendants went wrong:
- NAC and Andrade made it appear as if NAC had successfully developed the proprietary anti-money laundering (“AML”), know-your-customer (“KYC”), and other security features of AML BitCoin, when in reality the development efforts were in the early stages and the company needed to raise significant funds to conduct further development.
- NAC and Andrade issued press releases, social media outlets, and other promotional materials espousing those deceptions, along with false and misleading statements that governmental agencies had expressed interest in using AML BitCoin in their payment systems.
- Abramoff, upon becoming aware that some of the NAC offering and marketing materials contained false or misleading statements, nonetheless continued to solicit investors and conduct promotional activities for the offering.
- Abramoff arranged and helped write articles, which were purported to be written by independent authors rather than disclosing that they were paid promotions of NAC. Some of these articles included the false and misleading statements about NAC’s business.
- NAC, Andrade and Abramoff made false and misleading statements suggesting they were on the verge of airing a Super Bowl commercial for AML BitCoin that they falsely claimed was rejected by the National Football League and NBC because of its political content.
- Abramoff and Andrade discussed a strategy to artificially increase the trading volume and value of the Token on digital asset trading platforms.
SEC complaints … charged Andrade, NAC and Abramoff with violating the antifraud and securities registration provisions of the federal securities laws. The U.S. Attorney’s Office for the Northern District of California … announced parallel criminal actions against Andrade and Abramoff.
[For further details, click on SEC Complaints against … NAC Foundation and Marcus Andrade, and Jack Abramoff.]
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