A Significant Ruling in Cryptocurrency Fraud
A federal jury in the Northern District of California delivered a guilty verdict on Wednesday against Rowland Marcus Andrade, a cryptocurrency entrepreneur, for his involvement in wire fraud and money laundering related to the controversial sale of AML Bitcoin, a purported cryptocurrency.
The Fraudulent Initial Coin Offering
The charges against Andrade stem from an initial coin offering (ICO) he conducted for AML Bitcoin during 2017 and 2018. Court documents indicated that Andrade, a resident of Texas, misled investors by claiming that the AML Bitcoin tokens would eventually be transformed into a tradable cryptocurrency. However, the promised AML Bitcoin currency never saw the light of day, and its name was suspiciously similar to the well-established Bitcoin.
A Landmark Case in Cryptocurrency Regulation
This conviction marks a significant milestone in the prosecution of cryptocurrency-related fraud, representing one of the earliest and most protracted “pump-and-dump” cases pursued by U.S. federal authorities. The scheme involved artificially inflating the price of a cryptocurrency through misleading claims, only to sell off the assets at an inflated value.
Jack Abramoff: A Notorious Co-Conspirator
The Department of Justice identified infamous Washington lobbyist Jack Abramoff as a co-conspirator in this case. Abramoff, who is more widely known for his involvement in a high-profile federal corruption scandal that led to his imprisonment, pleaded guilty in 2020. As part of his plea agreement, he agreed to pay over $50,000 in disgorgement and interest. His story was famously depicted in the film “Casino Jack.”
Misappropriation of Investor Funds
According to the DOJ’s statement, Andrade misappropriated more than $2 million in proceeds from the sale of AML Bitcoin. He utilized these funds for personal expenditures, including the acquisition of two properties in Texas and the purchase of two luxury vehicles. Additionally, Andrade falsely asserted that the Panama Canal Authority was on the verge of permitting AML Bitcoin for transactions involving ships navigating the canal, a claim that had no basis in reality.
A Warning to Fraudsters
Acting United States Attorney Patrick D. Robbins commented on the case, stating, “Fraudsters often tout new and innovative technology in order to raise money from investors. But raising money through lies and misrepresentations is neither new nor innovative. It’s unlawful, plain and simple.” He emphasized that those who deceive investors for personal gain, spending their money on luxury items and real estate, will face serious consequences.
Upcoming Sentencing and Potential Penalties
Andrade is scheduled for sentencing in July, where he could face severe repercussions. According to the DOJ, he faces a maximum penalty of 20 years in prison for the wire fraud charge and an additional 10 years for money laundering. Furthermore, he may be required to forfeit all properties linked to his fraudulent activities, including the real estate acquisitions made in Texas.
