Security pioneer and cryptocurrency supporter John McAfee has been arrested in Spain after being indicted in the U.S. on multiple counts of tax evasion.
McAfee (pictured), 74, founded the McAfee security company, then went on to have a colorful career as a onetime fugitive in Central America and a strong supporter of various cryptocurrencies. The latter is where some of the allegations begin.
In a statement today, the U.S. Department of Justice states that McAfee is accused tax evasion including allegedly hiding cryptocurrency, a yacht, real estate and other properties. “McAfee earned millions in income from promoting cryptocurrencies, consulting work, speaking engagements and selling the rights to his life story for a documentary,” the justice department claims. “From 2014 to 2018, McAfee allegedly failed to file tax returns, despite receiving considerable income from these sources.”
McAfee hasn’t lived in the U.S. the entire time, but American citizens, unlike most nationalities in the world when they live abroad, are required to file a U.S. federal tax return and pay U.S. taxes even if they are paying income tax in their country of domicile. McAfee allegedly did not.
The cases against McAfee becomes more colorful yet, as the Justice Department alleged that McAfee evaded his tax liability by directing his income to be paid into bank accounts and cryptocurrency exchange accounts in the names of nominees and concealing his assets in the names of others.
The Justice Department is not the only U.S. government body interested in McAfee either. The Securities and Exchange Commission has filed charges too. The SEC alleges that McAfee promoted investments in initial coin offerings on Twitter without disclosing that he was paid to do so. McAfee’s bodyguard, Jimmy Watson Jr., was also charged for his role in the alleged scheme.
“McAfee promoted multiple ICOs on Twitter, allegedly pretending to be impartial and independent even though he was paid more than $23 million in digital assets for the promotions,” the SEC claims. “When certain investors asked whether he was paid to promote the ICOs, McAfee allegedly denied receiving any compensation from the issuers.”
It arguably gets even worse, with the SEC claiming that McAfee and Watson also engaged in a separate scheme to profit from a digital asset security by secretly accumulating a large position in McAfee’s accounts, touting that security on Twitter while intending to sell it and then selling McAfee’s holdings as the price rose
“Potential investors in digital asset securities are entitled to know if promoters were compensated by the issuers of those securities,” said Kristina Littman, cyber unit chief at the SEC. “McAfee, assisted by Watson, allegedly leveraged his fame to deceptively tout numerous digital asset securities to his followers without informing investors of his role as a paid promoter.”
The SEC has charged McAfee with violating antifraud provisions of federal securities laws and violating the anti-touting provisions. The Justice charges are multiple counts of tax evasion, each count attracting a maximum sentence of five years in prison.
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