John McAfee indicted on federal fraud charges for alleged cryptocurrency schemes

John McAfee wearing a suit and tie

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Businessman and software developer John McAfee is facing several federal fraud charges for allegedly using a pump-and-dump scheme to make millions by manipulating cryptocurrency markets.

The U.S. Attorney for the Southern District of New York indicted McAfee, 75, and Jimmy Watson Jr., 40, on charges relating to the promotion of altcoins, which are cryptocurrency commodities other than Bitcoin. The duo allegedly used McAfee’s Twitter account, which has about 1 million followers, to inflate the value of the altcoins for profit.

In one of the schemes, McAfee and Watson allegedly purchased large quantities of various altcoins at low market prices — some of these commodities can even be worth less than 0.01 USD — and then posted “false and misleading endorsement tweets,” causing people to purchase the coins en masse and artificially inflate their price, investigators said.

The two then allegedly sold off their holdings and took the profit, which amounted to more than $2 million in profits from December 2017 through December 2018. During the alleged scheme, McAfee, founder of the namesake antivirus software company, never revealed that he and Watson were holding mass quantities of the cryptocurrencies, prosecutors said.


The second alleged scheme involved what are known as initial coin offerings. Initial coin offerings are online fundraising events in which startup companies that use cryptocurrencies can sell and issue digital tokens to investors. McAfee and Watson allegedly hyped up these events in exchange for a substantial percent of the funds that were raised by the initial coin offering to issuers without disclosing to investors that they were profiting off the initial coin offerings they were promoting.

“As the United States Securities and Exchange Commission had publicly warned, and as McAfee and Watson well knew, the federal securities laws required them to disclose any compensation paid by ICO issuers for touting securities offerings styled as ICOs,” the Justice Department said.

“Furthermore, in several instances during this ICO touting scheme, McAfee and Watson took active steps to conceal their secret compensation arrangements with ICO issuers from ICO investors, and McAfee made false and misleading statements and omissions to hide such deals from ICO investor,” it added.

McAfee, Watson, and others collectively earned over $11 million in undisclosed compensation from December 2017 through February 2018, according to court documents.

McAfee and Watson have been charged with conspiracy to commit commodities and securities fraud, conspiracy to commit securities and touting fraud, wire fraud conspiracy and substantive wire fraud, and money laundering conspiracy offenses.

Watson was arrested Thursday night in Texas, while McAfee is jailed in Spain on separate federal criminal charges filed by the Justice Department’s Tax Division in October 2020. The U.S. is seeking the software engineer’s extradition.


The Washington Examiner contacted McAfee and McAfee’s wife, Janice McAfee, for comment about the charges, but neither could immediately be reached.

Tags: News, Crime, Cryptocurrency, Technology, Federal Courts, Twitter, Bitcoin

Original Author: Zachary Halaschak

Original Location: John McAfee indicted on federal fraud charges for alleged cryptocurrency schemes


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