Eccentric anti-virus millionaire John McAfee is facing federal charges again – this time for a pair of alleged cryptocurrency schemes that raised more than $ 13 million for him and the gang accused of swindlers, including his former security agent who became Executive Director.
Manhattan federal prosecutors announced Friday that McAfee, 75, was being held in Spain on separate criminal charges by the Justice Department’s tax division, while authorities seized his alleged accomplice, Jimmy Gale Watson. Jr., 40, of Texas.
It is the latest issue for the exclusive founder of the eponymous antivirus software. In October, McAfee was indicted for federal tax evasion and did not intentionally file tax returns from 2014 to 2018 and was accused of hiding assets, including his yacht and real estate, on behalf of others. At the time, Tennessee prosecutors claimed he earned millions from promoting cryptocurrencies and even selling his life story for a documentary.
The new indictment states that McAfee, Watson and other members of McAfee’s “so-called cryptocurrency team” engaged in “scalping” or a “pump and dump” system with the help of McAfee’s Twitter deal with @officialmcafee. They face charges, including conspiracy to commit goods and securities fraud, conspiracy to commit bank fraud, bank fraud and guarantees and conspiracy to defraud.
According to the federations, McAfee and his team bought dozens of publicly traded coins – an alternative to bitcoin – for low market prices, then posted fake and misleading tweets via McAfee’s Twitter to “artificially inflate” their price. market. McAfee and his alleged accomplices then sold their investments collectively for more than $ 2 million. The sages allegedly scalped at least 12 other publicly traded coins that qualify under federal law as commodities or securities.
While McAfee and Watson earned “illicit profits,” the indictment added, the long-term value of alternative currencies bought by investors fell “a year after the promotional tweets.” Prosecutors say McAfee falsely promised to disclose whether it has a high stake in altcoin in its tweets and public statements during the scheme.
In a second scheme, McAfee allegedly supported the “initial coin offerings”, without revealing that the startups behind the fundraising actions paid McAfee and his team for promotional tweets, with a large part of the revenue. obtained from investors.
The bizarre computer programmer who is trotting around the globe – once suspected of killing a neighbor in Belize, but who was never accused – began to intensify his Twitter profile in the years before the two schemes. Many of McAfee’s 784,000 followers were investors in cryptocurrencies, the indictment alleges.
In his Twitter biography, McAfee described himself as “Iconoclast. Lovers of women, adventure and mystery. Founder of McAfee antivirus. “His location is set like this: ‘Wherever I am.’
While the indictment does not identify altcoin offers, McAfee tweeted about several ICOs for emerging start-ups, including a healthcare platform called Docademic and a UK-based women’s taxi, Pink Taxi. . “The possibilities are endless when free healthcare is a reality. ICO Docademic ends on Sunday, not without a monumental success! One of the best ICOs I have seen “, he wrote on Twitter in April 2018.
“For women in cryptography: the pinktaxi.io ICO is the first security currency to help protect women in male-dominated societies. One if [sic] the most promising ICOs from Docademic or Bezop, ”McAfee posted in June 2018. The tweet included a video with him and a woman claiming to be a Pink Taxi investor.
The indictment also names an alleged co-conspirator revealed only as “McAfee Team Member-1,” whom McAfee allegedly directed him to buy large quantities of a specific altcoin, which he would then approve on Twitter and sell to make a profit.
Several baited investors lived in the southern district of New York, where a member of Team-1 tried to open an account with a digital asset exchange so that McAfee could liquidate its alleged conspiracy proceeds. cryptographic.
But in January 2018, the cryptocurrency exchange denied the application for membership of Team-1, prompting the man to withdraw an email identifying himself as an “employee of John McAfee” and threatening to sue for rejection.
Prosecutors say McAfee, Watson and their assistants also orchestrated a second system, using McAfee’s Twitter to promote “initial coin offerings” or a fundraising method used by startups, which is similar to an initial public offering – unless investors receive new digital “chips”, often in exchange for an established cryptocurrency such as Bitcoin.
The McAfee team should have known about federal securities laws that would require them to disclose any compensation from ICO issuers, the indictment said. Indeed, in November 2017, the US Securities and Exchange Commission specifically warned: “Any celebrity or other person promoting a virtual symbol or currency that is a guarantee must disclose the nature, scope and amount of compensation received. in exchange for the promotion. ”
The alleged scammers received more than $ 11 million in undisclosed compensation, which they made sure they hid from investors.
McAfee lived in Lexington, Tennessee, during the alleged scalping and ICO schemes, which took place from December 2017 to October 2018.
Watson began working as a private security guard for McAfee in November 2017 and moved into the home of the Tennessee technology pioneer. McAfee will soon promote Watson on guard as “executive advisor” and later as CEO of the McAfee team before leaving in October 2018, according to the indictment.
In January 2018, McAfee opened an account using his own name at a cryptocurrency exchange in California with the assistance of Watson and Watson’s wife.
McAfee and Watson, according to court papers, asked Watson’s ex-husband to use McAfee’s California exchange account to settle receipts from the multi-million dollar ICO promotion system before connecting more $ 1 million through a New York financial institution and direct it to a McAfee bank account in Tennessee.
The federations say that in April 2018, McAfee and Watson asked his wife to apply online to open an account on a New York Stock Exchange so that men could liquidate their inappropriate cryptocurrency.
If convicted in all respects, McAfee and Watson face up to 60 years in prison.
“McAfee and Watson are believed to have exploited a widely used social platform and enthusiasm among emerging market investors to earn millions through lies and deception,” Manhattan U.S. Attorney Audrey Strauss said in a statement. statement. “The defendants allegedly used McAfee’s Twitter account to post messages to hundreds of thousands of his Twitter followers, supporting various cryptocurrencies through false and misleading statements, to hide their true, self-interested motives.”
“Investors should pay attention to supporting investment opportunities on social networks,” Strauss concluded.