A U.S. political lobbyist has pleaded guilty to operating a digital currency scam that raised $5.6 million from investors. Known as AML Bitcoin, the scam promised a new and improved version of Bitcoin that would be regulatory compliant.
Jack Abramoff, 62, took the guilty plea during a hearing before a California federal court via telephone, Law360 reports. He was charged with conspiracy to commit wire fraud as well as violating the Lobbying Disclosure Act.
Abramoff was a key figure in AML Bitcoin, a digital currency startup that reportedly promised investors a superior version of Bitcoin (BSV). The project was founded by Rowland Marcus Andrade and his company National AtenCoin Foundation (NAC). Andrade, a Texas resident, reached out to Abramoff as he was well connected to head AML Bitcoin’s marketing activities.
Abramoff conducted an extensive media advertisement campaign, hiring people to write op-eds in some of the most established publications, authorities said. He advertised AML Bitcoin as a superior version of the original Bitcoin and claimed that it would use biometric technologies for identification, making it the “first digital currency that’s fully compliant with anti-money laundering and know-your-customer regulations.”
Abramoff also made other misleading claims to lure investors, including stating that AML Bitcoin would be advertised during the Super Bowl. When this didn’t happen, he claimed that the NFL and NBC had turned down the ad. The two entities later revealed that Abramoff never contacted them regarding the ad.
Through his company, the NAC Foundation, Andrade began selling tokens in July 2017, claiming that the money would go towards developing AML Bitcoin, authorities said. Once the network was up and running, the investors could convert the tokens into AML Bitcoins, he told them. A few months later, he conducted an ICO to raise more funds.
The SEC claims that the ICO managed to raise $5.6 million from over 2,400 investors. However, most of the funds were channeled to personal expenses.
Abramoff also pleaded guilty to violating the Lobbying Disclosure Act by lobbying for the marijuana industry in Congress without registering as a lobbyist. This is the second time he has violated the Act, having served nearly four years in prison for a similar crime a decade ago.
Abramoff faces up to ten years in prison for the two crimes. He also agreed to disgorge the $50,000 he got from the sale of the tokens and pay a prejudgment interest of $5,500.
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