Antivirus Software Pioneer John McAfee Charged with Cryptocurrency Fraud

John McAfee
Source; John McAfee Twitter account

John McAfee, the antivirus software pioneer, is facing a criminal complaint in connection with two schemes related to the fraudulent promotion of cryptocurrencies to investors.

According to the U.S. Attorney’s Office for the Southern District of New York, McAfee was indicted along with his cryptocurrency team’s executive adviser, Jimmy Gale Watson Jr.

The criminal charges filed against them include 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.

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In October last year, the Department of Justice and the Securities andExchange Commission (SEC) filed two separate lawsuits against McAfee. The DOJ accused him of “tax evasion and willful failure to file tax returns.” The SEC alleged that he violated federal securities laws by fraudulently promoting initial coin offerings (ICOs).

McAfee and his cryptocurrency team allegedly engaged in a “pump-and-dump” scheme

McAfee and Watson allegedly participated in the so-called “pump-and-dump” scheme by exploiting social media such as Twitter to promote and artificially inflate the price of altcoins. The defendants allegedly made false and misleading statements regarding their investment positions in altcoins. They allegedly concealed to the investing public that they acquired altcoins with the intention of selling them in the short-term.

McAfee published Twitter messages recommending several (ICOs) but did not disclose that he and other members of his team received compensation from the issuers, according to the complaint.

McAffee, Watson and others allegedly “willfully and knowingly” conspired to commit securities fraud, wire fraud, and money laundering between December 2017 and October 2018.

In a statement, Manhattan U.S. Attorney Audrey Strauss said, “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.”

He noted that the antivirus software pioneer and other members of his cryptocurrency team profited more than $13 million from investors victimized by their fraudulent schemes.

“Investors should be wary of social media endorsements of investment opportunities,” said Strauss.

On the other hand, FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, McAfee and Watson used social media to perpetrate an age-old pump-and-dump scheme that earned them nearly two million dollars. Additionally, they allegedly used the same social media platform to promote the sale of digital tokens on behalf of ICO issuers without disclosing to investors the compensation they were receiving to tout these securities on behalf of the ICO. When engaging in illegal activity, simply finding new ways to carry out old tricks won’t produce different results. Investment fraud and money laundering schemes carry a strict penalty under federal law.”

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