Regulation
John McAfee Charged with Fraud Stemming from Past Attempts to Inflate Token Values
John McAfee, the infamous pusher of suspect initial coin offerings (ICOs) and cryptocurrencies, has just been charged with a litany of crimes. Also named alongside John McAfee, is his top advisor Jimmy Watson Jr.
Manhattan U.S. Attorney Audrey Strauss commented on the chain of events, issuing a warning to investors on the perils of such schemes.
“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. The defendants allegedly used McAfee’s Twitter account to publish messages to hundreds of thousands of his Twitter followers touting various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives. McAfee, Watson, and other members of McAfee’s cryptocurrency team allegedly raked in more than $13 million from investors they victimized with their fraudulent schemes. Investors should be wary of social media endorsements of investment opportunities.”
Charges Laid
In now release court documents, charges against John McAfee are listed as follows.
- Commodities and Securities Fraud Conspiracy: Scalping
- Wire Fraud Conspiracy: Scalping
- Wire Fraud
- Securities and Touting Fraud Conspiracy: Touting
- Wire Fraud Conspiracy: Touting
- Wire Fraud: Touting
- Money Laundering Conspiracy
For those looking to peruse documentation released by the courts, detailing these allegations, click HERE.
The Root Cause
Each of the aforementioned charges stem from his actions between the end of 2017 to the end of 2018. During this time, John McAfee is alleged to have purchased assets, inflated their value through their promotion via social media, only to sell them off at now inflated prices. It is alleged that John McAfee and his top advisor specifically sought out projects which they believed could be easily manipulated.
While often referred to as a ‘pump-and-dump’ within crypto markets, these actions are more traditionally known as scalping.
Pump and dump schemes are nothing new – they were rampant in 2017, and continue to run unchecked in todays cryptocurrency markets.
The following are a few examples of projects promoted during the time period in which John McAfee and his team were actively running their scheme.
Making things even worse, is that John McAfee and his team didn’t just hide the fact that they had holdings in the coins and ICOs which they promoted – they flat out lied to the public on multiple occasions, denying any vested interests.
The Department of Justice highlights this through a past tweet of John McAfee’s. In response to the question, “Dear John, do you get payed to say these things?”, John McAfee states,
“I do not. I merely sift through the mass if tokens to find the gems and share them. It’s in everyone’s interest to support coins that improve our lives.”
A Lucrative Scheme
With John McAfee having such a well-known public persona, his influence and reach is greater than most. Due to this, it is alleged that he and his team were able to rake in at least $13 million USD from their actions involving scalping or ‘pump-and-dump’ schemes.
Preexisting charges levied in late 2020 by the Securities and Exchange Commission allege that he also generated at least $23 million from recommending ICOs during the 2017 bull market. These funds were generated by hidden sponsorship – meaning companies paid John McAfee to promote their projects, while refraining from telling the public of this compensation.
Double-Edged Sword
Twitter is an interesting platform. While it can be to disseminate important information directly from sources, it also acts as a public record. This means that is an individual with power isn’t careful what they say, it could come back to hurt them. As such, it is interesting to see that individuals like John McAfee, who find themselves under great scrutiny, don’t simply step away.
Despite the charges being laid upon him stemming from a past Twitter campaign of his, John McAfee has continued to utilize the platform to speak out. He has now responded to these most recent charges, stating,
“Much of the new allegations from the Feds are about my “coin of the day”. For a few days in 2017 I chose coins I believed had value. One of them was Doge – now being touted years later by Elon Musk. The coin has increased well over 1000% since I chose it. Not a pump and dump.”
Interestingly, he attempts to shine some of the spotlight on to Elon Musk, as he also has a history of influencing markets through Twitter. Moving forward, all eyes will be fixed on such individuals, as their ability to influence others comes under greater scrutiny by regulators.
Recurring Theme
It should be noted that these are each new charges, unrelated to those which led to John McAfee currently being detained in Spain. This on-going detainment is the result of past allegation of tax evasion.
If the current situation, along with that which led to his detainment in Spain, isn’t enough to catch your attention, rewind back to 2012. While most of the crimes allegedly committed by John McAfee are financial in nature, he once fled the nation of Belize when he found himself caught up in the middle of an active murder investigation.
A Rise to Fame
While John McAfee has forged an identity in recent years as an anti-establishment rebel and potential criminal, it was decades ago that he gained fame.
In the late 1980’s John McAfee founded the anti-virus software of the same name. While the software suite remains one of the most popular cyber-security products to date, the company has long since parted ways with its notorious founder.
While his fame originated from the creation of the wildly popular anti-virus software ‘McAfee’, it has since taken various twists and turns over the years.
Through various run-ins with the authorities, typically stemming from tax-issues, John McAfee has gained notoriety over the years as an intriguing personality, with a proclivity for causing trouble.
