Money laundering and financing of terrorism have always been one of the major concerns of regulators around the globe. Certain financial services regulators have followed strict anti-money laundering (‘AML’) guidelines and conduct scrutiny of business models before providing with a decentralised ledger technology (‘DLT’) related business license, for e.g. a cryptocurrency exchange. Even following this, the reach of cryptocurrencies is such that tracking all transactions and identifying the ultimate beneficiary is a tough task for regulators and financial task force agencies.
In a recent, slightly ironic, turn of events recently, Roland Marcus Andrade, the creator of “AML Bitcoin”, was charged with fraud and money laundering on June 22, 2020 and indicted on June 25, 2020 pending case in the United States of America v. Roland Marcus Andrade and separate charges in the Securities And Exchange Commission v. NAC Foundation, LLC et al to be held at the Northern District of California District Court. Roland Marcus Andrade was indicted under the following laws:
18 U.S.C § 1343 – Wire Fraud;
18 U.S.C. § 2 – Aiding and Abetting;
18 U.S.C. § 1956(a)(1) – Money Laundering; and
18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c)- Forfeiture Allegation.
AML Bitcoin is a cryptocurrency developed by Roland Marcus Andrade, under the National AtenCoin Foundation, LLC (‘NAC Foundation’) whose founder and the principal is Roland Marcus Andrade. Prior to AML Bitcoin, Roland Marcus Andrade had also created and sold other cryptocurrencies named “Black Gold Coin” and ‘AtenCoin”. In the whitepaper for AML Bitcoin, Roland Marcus Andrade proclaimed that the cryptocurrency would be compliant with AML laws and know your customer (‘KYC’) norms through the application of ‘biometric technologies’ and other methods that will be relevant to confirming the identity of the parties involved in the transaction. Through the whitepaper, Roland Marcus Andrade aimed to raise USD 100 million for the public sale of AML Bitcoin tokens. The sale began in 2017 and purchasers of the token were conveyed that once the AML Bitcoin technology was functioning, the tokens would be converted into actual cryptocurrency and up till February 2018, NAC Foundation conducted the initial coin offering (‘ICO’) of the AML Bitcoin tokens. All information communications and soliciting of AML Bitcoin tokens were done through Roland Marcus Andrade.
It was the contention of investigative agencies and the US Attorney that Roland Marcus Andrade along with Jack Abramoff, a lobbyist had defrauded the potential purchasers of AML Bitcoin through making false pretenses and misleading statements and concealment of material facts from a period of July 2017 to December 2019 (app.). In addition to misleading purchasers, the indictment also states that Roland Marcus Andrade misused the funds that were raised through the ICO and laundered the funds which were illegally obtained. Through the ICO, Roland Marcus Andrade raised almost USD 5 million. During the ICO period, Roland Marcus Andrade misrepresented the timeline of the development of the AML Bitcoin technology and when would the tokens be converted into actual cryptocurrency. Roland Marcus Andrade kept on stating that the technology and ready to launch, AML KYC compliant, cryptocurrency would be ready in 6 (six) months, however, the same was not met. Roland Marcus Andrade and his associates also perpetrated the scheme of false advertising, wherein they claimed to have purchased an advertisement in the super bowl, however, the same was rejected by the television network for being too controversial. In truth, Roland Marcus Andrade and the NAC Foundation did not have the funds required for the advertising campaign. Moreover, the NAC foundation along with representative also announced that they were “engaged in talks” with the governments of Panama Islands and the Panama Canal Authority for the purpose of usage of AML Bitcoin to be used for ships passing through the Panama Island, however, no such arrangement was in place. Moreover, Roland Marcus Andrade diverted more than USD 1 million obtained through the sale of AML Bitcoin and utilised the capital for personal usage, including the purchase of properties in Texas.
Roland Marcus Andrade was arrested on June 23, 2020 in Missouri, Texas with a pending appearance in the San Francisco Federal Court on July 1, 2020.
If convicted, then Roland Marcus Andrade may face the following:
For violation of 18 U.S.C § 1343 – Wire Fraud
a maximum prison sentence of 20 years; and
USD 250,000 fine plus retribution if any.
For violation of 18 U.S.C. § 1956(a)(1) – Money Laundering
maximum prison sentence of 20 years; and
USD 500,000 fine
While the con-conspirator, Jack Abramoff faces:
For violation of 18 U.S.C. § 371- Conspiracy to defraud
a maximum prison sentence of 5 years; and
USD 250,000 fine
For violation of 2 U.S.C. § 1606(b)- Criminal lobbying
a maximum prison sentence of 5 years; and
USD 250,000 fine
The verdict from the trial in the case is still pending and we shall be updating the same as it appears into the public forum.
The SEC complaint can be accessed at- https://www.sec.gov/litigation/complaints/2020/comp-pr2020-145-nac-andrade.pdf
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