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The U.S. Securities and Exchange Commission (SEC) has fought off a bid to have a case against an alleged $5.6 million digital currency scam dismissed. The watchdog wants the case against NAC Foundation and its founder to continue, arguing that they sold securities without the registering with the regulator.

In its filing with the Northern District of California, the SEC urged the judge to dismiss the NAC Foundation’s claims that the case has no merits. The Foundation had filed a motion to dismiss the case a month ago, accusing the regulator of misconduct and “purposefully attempting to mislead the court.”

The legal battle stems from the NAC Foundation’s token sale which attracted $5.6 million from over 2,400 investors. As the SEC alleged in its court filings in June, the Foundation sold tokens that it claimed would later be converted to AML BitCoin, a supposedly superior version of Bitcoin. The firm claimed that AML BitCoin had anti-money laundering, theft-resistant and anti-terrorism technologies built into it. The Foundation would issue the digital currency on its own “privately regulated” yet public blockchain.

To lure investors, NAC Foundation founder Marcus Andrade falsely claimed that multiple government agencies were looking to use AML Bitcoin. Additionally, he brought on lobbyist Jack Abramoff for publicity. Together, the two falsely claimed they would be advertising AML BitCoin during the Super Bowl, despite being unable to foot the costs.

The SEC further alleges that Andrade directed a market manipulation strategy to boost the token’s price and trading volume to lure investors. He then went on to divert approximately $1.1 million from the firm’s ICO to his personal expenses.

The regulator charged the two co-conspirators with a violation of the anti-fraud and securities registration provisions of the federal securities laws. It sought permanent injunctions, disgorgement of ill-gotten gains and civil penalties.

Four months later, Andrade fought back against the SEC charges, accusing the regulator of misconduct. According to October court documents, Andrade argued that the SEC misled the court by claiming he offered a technology that he had yet to develop. This was despite the SEC’s awareness that Andrade held patents for AML technology related to AML BitCoin.

Andrade further claimed that he had made anyone who purchased AML BitCoin aware that the tokens were not an investment. NAC Foundation’s sales terms additionally stressed that the investors should not expect a return on investment.

See also: Blockchain Intelligence Group’s Lance Morginn discusses Blockchain Intelligence: Analytics, Forensics & Compliance Tools for Bitcoin SV at CoinGeek Live

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