The founder of a cryptocurrency exchange associated with Anti-Money Laundering (AML) efforts, Rowland Marcus Andrade, was recently convicted in a California court for wire fraud and money laundering. This case, which unfolded over a March 12 trial in the U.S. District Court for the Northern District of California, serves as a stark reminder of the legal repercussions that can arise in the burgeoning world of cryptocurrencies.
Andrade, the creator of AML Bitcoin, was found guilty on two felony counts stemming from a complex scheme to defraud unsuspecting investors. The investigation into his activities began in June 2020, leading to not only criminal charges but also a parallel civil case filed by the U.S. Securities and Exchange Commission (SEC). The allegations against Andrade and the NAC Foundation, which he founded and led, claimed that the cryptocurrency would adhere to established AML regulations — a claim that proved to be largely fictitious.
“Mr. Andrade’s outrageous lies lured and scammed individuals into investing their hard-earned money into a new cryptocurrency with fabricated features,” stated Linda Nguyen, Special Agent in Charge of the IRS Criminal Investigation Oakland Field Office. This conviction highlights a broader concern within the cryptocurrency community: the potential for fraud and misinformation that can tarnish the industry’s reputation.
Rowland Marcus Andrade jury verdict on March 12. Source: PACER
The SEC’s civil case against Andrade took on added notoriety due to the involvement of disgraced political lobbyist Jack Abramoff, who had previously been convicted on various charges, including mail fraud and conspiracy to bribe public officials. The court has since agreed to stay the SEC’s lawsuit pending the outcome of Andrade’s criminal case, indicating that further legal action may soon follow.
The indictment revealed that the NAC Foundation misrepresented the AML Bitcoin initiative, including false claims that it had received approval from the Panama Canal Authority for use in shipping operations. Andrade’s fraudulent practices apparently led him to divert over $2 million from the offerings, utilizing the funds for personal gain, including luxury cars and real estate.
As Andrade prepares for sentencing on July 22, 2023, where he could face up to 30 years in prison, this case stands as a critical example for both investors and founders in the cryptocurrency space. The necessity for due diligence, regulatory compliance, and ethical practices cannot be overemphasized in this rapidly evolving market. Andrade remains free on a $75,000 bond, with travel restrictions until he faces the court once more for sentencing.
This situation serves not only as a cautionary tale for potential investors but also as a reminder for entrepreneurs in the cryptocurrency field to uphold integrity and transparency in their operations. As the landscape continues to develop, proactive compliance with legal and ethical standards will be essential in establishing trust and credibility in the industry.
