John McAfee and his executive adviser Jimmy Gale Watson Jr. have been charged with securities fraud. Federal prosecutors believe the pair earned nearly $2 million due to a ‘pump and dump’ cryptocurrency scheme. McAfee is believed to have urged Twitter followers to invest in cryptocurrencies like Reddcoin and Dogecoin. Once the price rose, they would then sell off their own holdings.
US Attorney Audrey Strauss released a statement. “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.”
The scheme was allegedly run between December of 2017 and October of 2018. McAfee used his verified Twitter account to recommend a “Coin of the Day” or “Coin of the Week.”
The indictment says that McAfee would claim to have no stake in the altcoins. McAfee however, would allegedly buy large quantities beforehand using bitcoin. He would then offload them again after his followers had driven up the price.
McAfee and Watson are facing seven charges, with each count carrying between five and 20 years in prison. This includes wire fraud, conspiracy to commit commodities and securities fraud, and conspiracy to commit money laundering. Prosecutors believe McAfee and his investors made $13 million from defrauding investors.
McAfee is known for creating computer anti-virus company, McAfee Associates, in 1987 before resigning in 1994. He has had numerous legal issues since then.
He is currently being detained in Spain on separate tax evasion charges while Watson was arrested in Texas on Thursday. The SEC sued him last October for fraudulently promoting initial coin offerings or ICOs. He was also ordered to pay $25 million for allegedly ordering the killing of his neighbor in Belize in 2012. McAfee has denied involvement with that and refused to pay.
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