Federal prosecutors have indicted former antivirus entrepreneur John McAfee and his associate for orchestrating what they call a fraudulent scheme designed to rake in millions of dollars from cryptocurrency investors.
McAfee and his “cryptocurrency team” advisor Jimmy Watson are accused of having operated an “age-old pump-and-dump scheme” using McAfee’s Twitter account to promote “various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives.”
John David McAfee and executive adviser of his cryptocurrency team indicted in Manhattan federal court for fraud and money laundering conspiracy crimes https://t.co/A96USZb6pC
— US Attorney SDNY (@SDNYnews) March 5, 2021
In simple terms, McAfee and his team were apparently buying up big chunks of obscure cryptocurrencies and then posting “false and misleading endorsement tweets” that would cause investors to artificially drive up the price of the coins. Meanwhile, the McAfee operation would quickly unload their positions.
“McAfee Team members collectively earned more than $2 million in illicit profits from their altcoin scalping activities,” the Department of Justice alleges.
The prosecutors further allege that McAfee and Watson earned substantial money for advertising and promoting crypto investments without disclosing the fact that they were being compensated for their endorsements:
They allegedly made a further $11m in payments from cryptocurrency start-ups for promoting their assets on Twitter, payments which were not disclosed to investors who bought them.
That amounted to having “exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception,” federal prosecutor Audrey Strauss said.
In the separate tax evasion case – which was announced last October – Mr McAfee is accused of failing to file any tax returns from 2014 to 2018. Prosecutors also say he used other people’s names to conceal his assets, including a yacht and property.
McAfee and Watson are charged with commodities and securities fraud conspiracy, wire fraud conspiracy, wire fraud, touting fraud conspiracy and money laundering conspiracy.
McAfee sought the Libertarian Party’s presidential nomination in 2016. Following a colorful campaign, McAfee finished in third place at the convention behind nominee Gary Johnson and Austin Petersen. He drew approximately 14% of the vote on the first and second ballots.
McAfee again announced he would run for president in 2020, before suspending his campaign and instead attempting to seek the LP’s vice-presidential nomination. He was not successful.
That I am ending my campaign for President.
I am instead
Attempting to run
For the Vice Presidential slot.
And offer to be his VP pick.
Full explanation in video. pic.twitter.com/750ggzJdBY
— John McAfee (@officialmcafee) March 4, 2020