In the afternoon As of December 20, 2017, controversial cybersecurity pioneer John McAfee tweeted that he would embark on a kind of educational blitz. “Starting tomorrow, I will talk every day about an exclusive altcoin,” wrote McAfee. “Most of the 2,000 coins are rubbish or scams. I read all the white papers. The few to which I am connected, I will tell you. The rest I have no position. ”It was that last part that caught the attention of the Justice Department.
On Friday, New York City’s Southern District Attorney indicted McAfee and executive assistant Jimmy Watson on several charges that span two alleged cryptocurrency schemes. (McAfee was previously indicted in October on separate tax evasion charges.) According to court documents, McAfee and his associates raised $ 13 million combined between the two efforts, which depended on using McAfee’s popular Twitter account to push niche cryptocurrencies or promoting initial coin offerings without revealing that it would make a profit, either through investment earnings or promotional fees.
“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 Attorney General Audrey Strauss said in a statement. press release. “The 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.”
Pump You Up
The altcoin trades that McAfee promoted were one of the alleged legs of this deception. In mid-December 2017, he allegedly instructed an associate to buy about $ 5,000 worth of tokens at XVG, also known as Verge. That same day, on Twitter, McAfee described XVG – along with more established tokens, such as Monero and Zcash – as a “must-lose” currency. Two days later, when a Twitter user suggested that McAfee had “pumped” the XVG, artificially inflating its value to sell high, McAfee responded with indignation. “I don’t have XVG,” he wrote. “I live [sic] as you, superficial people, cannot distinguish between someone who says what they think shamelessly – because it is true – and someone with a hidden motive. You know absolutely nothing about me if you believe I have time to waste throwing up garbage. “
XVR increased 500 percent in the four days after McAfee’s initial tweet. McAfee, promoters say, sold near the top, generating a profit of $ 30,000.
This success seems to have inspired what McAfee would call its “Coin of the Week” series. On the same day that it announced its journey on “unique altcoins” on Twitter, McAfee allegedly instructed an associate to put $ 100,000 of bitcoin in Electroneum tokens. On December 21, 2017, he tweeted a brilliant, bulleted report on ETN, including a claim that he had “more than one DM calling Electroneum the cryptocurrency’s Holy Grail”. (This is in stark contrast to what McAfee tweeted just a week earlier, in December 15: “I personally do not find anything about Electroneum that I would like to talk about. Not that it’s bad, it just isn’t special to me. ”) He again claimed that he had none.
The electonium increased by 40% that day. The McAfee associate has profited, prosecutors say.
The court documents allege a repetition of the foam, the rinse and the basic scheme carried out until January 28 of the following year. McAfee instructed its associate to buy “hundreds of thousands or even millions of tokens” on the altcoin presented that week less than 10 days before presenting it. McAfee extols the virtues of BURST, DGB, RDD, HMQ, TRX, FCT, DOGE, XLM, SYS and RCN. His associate, prosecutors say, would close the post soon afterwards to profit from the usual bump. In all, they allegedly pocketed $ 2 million with the pump-and-dump scheme, including hundreds of thousands from Dogecoin alone.