U.S. millionaire John McAfee gestures during an interview with AFP on his yacht docked at Marina Hemingway in Havana on June 26, 2019.
Antivirus software mogul John McAfee, who has been awaiting extradition from Spain on charges of tax evasion since late last year, had his legal problems exacerbated by federal prosecutors in Manhattan on Friday morning. The 75-year-old computer programmer is now also accused of $ 13 million fraud and money laundering.
Prosecutors claim that McAfee and Jimmy Gale Watson Jr., an executive consultant on his cryptocurrency team, involved in a “bomb and dump” scheme known as “scalping”, where he bought large quantities of publicly traded cryptocurrency altcoins at cheap prices to be resold on social media.
“As alleged, McAfee and Watson exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception,” Manhattan US Attorney Audrey Strauss wrote in a statement. “Defendants allegedly used McAfee’s Twitter account to post messages to hundreds of thousands of their Twitter followers, spreading various cryptocurrencies through false and misleading statements to hide their true self-interest motives. McAfee, Watson and other members of the McAfee cryptocurrency team reportedly raised more than $ 13 million from investors that they victimized with their scams. Investors should be cautious about endorsing investment opportunities on social media ”.
McAfee now has more than a million followers on its verified Twitter account, where it promoted its altcoins in messages embedded in its criminal complaint.
McAfee tweeted the altcoin endorsements on its verified account, without revealing that it had large amounts of them, although it falsely promised transparency, prosecutors say.
Along with other members of his team, McAfee reportedly sold his investment position in that significant short-term price increase his tweets generated, but the long-term value of altcoin generally declined significantly in the year following his tweets, according to the complaint .
Prosecutors say the first time McAfee successfully executed this scheme happened in mid-December 2017, with an altcoin called Verge (XVG).
On December 21, 2017, an investor at XVG lobbied McAfee about whether he bought altcoin before promoting it, and the antivirus guru falsely denied it, prosecutors say.
“I didn’t buy any at all,” the complaint quotes McAfee as responding. “I couldn’t promote it if I were the owner.”
Four days after McAfee allegedly promoted XVG in a tweet and on December 13, 2017, the market price for tokens skyrocketed by more than 500%, according to the complaint.
McAfee and an alleged unidentified co-conspirator scalped at least 11 more altcoins between December 20, 2017 and January 28, 2018: Electroneum, Burstcoin, DigiByte, Reddcoin, Humaniq, Tron, Factom, Dogecoin, Stellar Lumen, Syscoin and Ripio Credit Network Tokens, promoters say.
Watson, 40, was arrested Thursday night in Texas and will be presented to a federal judge on Friday.
Both McAfee and Watson face a seven-count charge, alleging one conspiracy charge to commit securities and advertising fraud, one conspiracy charge to commit securities and advertising fraud, two charges of conspiracy to commit electronic fraud, and two charges of substantive electronic fraud, and a charge of conspiracy to commit money laundering, leading to a possible combined exposure of decades of imprisonment.
Read the McAfee prosecution and criminal complaint below:
(Photo by ADALBERTO ROQUE / AFP via Getty Images)
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