- McAfee and Watson executed the “pump and dump” cryptocurrency scheme through McAfee’s Twitter followers.
- McAfee faces multiple charges of money laundering offenses.
John McAfee has been charged with securities fraud over a cryptocurrency scheme called “pump and dump”. Federal prosecutors brought up a case against McAfee and his executive advisor and bodyguard Jimmy Gale Watson Jr. The prosecutors claimed that the duo earned about $2 million. Both of them urged their Twitter followers to invest in cryptocurrencies like Reddcoin and Dogecoin. And then they sold off their own holdings as the rates went up.
“McAfee and Watson exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception,” said US Attorney Audrey Strauss in a statement. “The defendants allegedly used McAfee’s Twitter account to publish messages to hundreds of thousands of his Twitter followers touting various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives.”
The duo executed their scheme within the period of December 2017 to October 2018. McAfee used his verified Twitter account to suggest a “Coin of the Day” or “Coin of the Week”. McAfee’s Twitter account has currently 1 million followers. The allegations say that McAfee claimed to have no stakes in these altcoins.
Allegations against McAfee
But in reality, McAfee allegedly used to buy large quantities in advance using bitcoin. As their followers drove the prices up, the duo would sell them off. The pair has seven charges against them where each count carries five to twenty years in prison. The criminal charges against them include wire frauds, conspiracy to commit commodities and securities, and conspiracy to commit money laundering.
“As alleged, McAfee and Watson exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception,” said Manhattan US attorney Audrey Strauss in a press release. “The defendants allegedly used McAfee’s Twitter account to publish messages to hundreds of thousands of his Twitter followers touting various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives.”
SEC’s Response
The Securities and Exchange Commission and the Commodities Future Trading Commission have also slapped charges against the pair in parallel enforcement actions.
Currently, McAfee is facing detention in Spain with other criminal charges against him. It is not yet clear who represents McAfee and Watson legally, for this case. McAfee also faced interrogation in 2012 in the case of a murdered neighbor. He fled to Belize for a brief time period.
In October 2020, McAfee was arrested in Spain as US prosecutors indicted him on separate charges for alleged involvement in tax evasion. He is still in Spain and he is waiting to be extradited to the US.
It is not the first time for McAfee to have a run-in with the law. He has faced various charges in his past as well. But, the current charges around the “pump and dump” cryptocurrency remain the biggest one so far. “When engaging in illegal activity, simply finding new ways to carry out old tricks won’t produce different results,” the FBI’s Sweeney said about the use of social media to carry out the alleged schemes.
