Newest Federal Indictment Comes After Tax Evasion Fees
John McAfee, who already faces federal tax evasion charges, has now been indicted for allegedly using his vast social media following to run cryptocurrency pump-and-dump schemes as well as promote virtual currencies to investors without revealing his stake in them, according to the Justice Department.
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McAfee, the founding father of the cybersecurity agency that also bears his identify, alongside together with his enterprise associate and bodyguard, Jimmy Gale Watson, Jr., are going through quite a few new prison fees, together with conspiracy to commit commodities and securities fraud, conspiracy to commit securities and touting fraud, conspiracy to commit wire fraud and substantive wire fraud, in keeping with a seven-count indictment unsealed Friday.
Probably the most critical of the costs, substantive wire fraud, carries a possible 20-year federal jail sentence, prosecutors say.
McAfee, 75, stays in custody in Spain whereas awaiting extradition to the U.S. The serial entrepreneur and one-time presidential candidate has been detained in Europe since October 2020, when the Justice Division filed federal tax evasion fees towards him for allegedly having his revenue and charges deposited into financial institution and cryptocurrency change accounts held in one other particular person’s identify (see: John McAfee Indicted on Federal Tax Evasion Charges).
The Securities and Exchange Commission has additionally filed civil fees towards McAfee and Watson for selling preliminary digital coin choices with out disclosing that they held substantial monetary stakes within the currencies.
McAfee Denies Fees
Over the weekend, McAfee returned to Twitter and pushed again towards the most recent fees, writing that he merely made investments in sure different cryptocurrencies and that he each misplaced and made cash based mostly on these investments.
The SEC allegations:
My group evaluated each promotion based mostly on administration, enterprise plans and potential. Nobody might have foreseen the altcoin market crash.
We had been paid in the identical cash that crashed. The SEC allegations are overblown.
— John McAfee (@officialmcafee) March 6, 2021
Within the meantime, Watson was arrested and made his first look in federal courtroom on Friday.
Alleged Pump-and-Dump Scheme
The federal indictment towards McAfee and Watson alleges that the 2 males, in addition to others who labored as a part of the “McAfee group,” purchased different cryptocurrencies at under market worth after which used McAfee’s social media following to inflate the worth of the digital foreign money earlier than dumping it and leaving traders at the hours of darkness.
The alleged schemes ran from December 2017 by way of October 2018, in keeping with federal prosecutors.
Investigators allege that McAfee, Watson and others allegedly scammed greater than $13 million from varied traders with these pump-and-dump ways, says Audrey Strauss, the U.S. lawyer for the Southern District of New York, which is overseeing the case.
“McAfee and Watson exploited a broadly used social media platform and enthusiasm amongst traders within the rising cryptocurrency market to make tens of millions by way of lies and deception,” Strauss famous. “The defendants allegedly used McAfee’s Twitter account to publish messages to lots of of hundreds of his Twitter followers touting varied cryptocurrencies by way of false and deceptive statements to hide their true, self-interested motives.”
Preliminary Coin Choices
Along with the alleged pump-and-dump schemes, McAfee, Watson and others had been concerned in seven preliminary coin choices – ICOs – with McAfee utilizing his social media platforms to speak up these new digital currencies however falsely claiming that he had no monetary stake in these cryptocurrencies, prosecutors say.
“In every occasion, McAfee and Watson didn’t open up to ICO traders that the ICO insurers had been paying the McAfee group a considerable portion of the funds raised from the ICO traders for his or her touting efforts, regardless of realizing that they had been required to reveal such compensation beneath federal securities regulation,” in keeping with the indictment.
In a number of circumstances, McAfee touted investments in cryptocurrency as his “coin of the day” and talked about varied digital currencies on his social media platforms. Prosecutors say that McAfee claimed “he would disclose any situations during which he held an funding place in his ‘coin of the day.'”
In December 2017, McAfee and others started touting an preliminary coin providing known as Electroneum. Whereas McAfee claimed on social media that he was merely providing funding recommendation and was not actively investing on this digital foreign money, federal prosecutors allege that the McAfee group used $100,000 in bitcoin to construct a place in Electroneum tokens.
“In response to a query on Twitter, McAfee falsely denied that he owned any [Electroneum] tokens or had any self-interest in touting [Electroneum], misrepresenting in a tweet revealed on or about December 21, 2017, that: ‘I personal no ETN. I’m not pumping for my acquire. I’m displaying you the unbelievable worth of supporting a coin that can change the world,'” in keeping with the criminal complaint.
By way of this alleged scheme, prosecutors say, McAfee, Watson and others earned a complete of about $11 million.
McAfee has had a colourful historical past since leaving the cybersecurity agency he based.
In 2012, McAfee fled from Belize claiming regulation enforcement officers within the South American nation had been making an attempt to border him for homicide. On the time, native police thought-about him a “particular person of curiosity” following the loss of life of his neighbor, a Florida businessman, in keeping with Wired. He was then arrested in Guatemala for illegally coming into the nation and deported to the U.S. He was by no means charged in reference to the loss of life.
In 2015, McAfee instructed his Fb followers he had been concerned in a shootout with Tennessee state troopers whereas being arrested for driving beneath the affect and a gun offense, an announcement he quickly recanted.
McAfee additionally briefly ran for U.S. president within the 2016 race (see: Guess Who’s Running for President? John McAfee).
On Monday, McAfee’s one-time cybersecurity company introduced that it could break up off its enterprise and shopper divisions in a $4 billion deal.