Justice officials claim antivirus founder and associate fraudulently promoted altcoins via Twitter.
Federal prosecutors indicted John McAfee on Friday on securities fraud and money-laundering charges.
The Justice Department issued a press release announcing the indictment that alleges the antivirus software company founder and his cryptocurrency adviser, Jimmy Watson, are behind fraudulent so-called “pump and dump” schemes.
Officials claim McAfee and his associates purchased large amounts of cheap cryptocurrency “altcoins” — that is, alternatives to Bitcoin — and then actively worked to inflate the price with “false and misleading endorsement tweets.”
“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,” said Manhattan U.S. Attorney Audrey Strauss in the release.
The Department of Justice alleges McAfee and his associates collectively earned more than $2 million in illegal profits from the altcoin scalping activities.
In a second scheme, officials allege McAfee and other McAfee Team members used McAfee’s popular Twitter account to publicly tout fundraising events called “initial coin offerings” (ICOs). He failed to disclose that he was being compensated for the tweets.
Those involved “collectively earned more than $11 million in undisclosed compensation that they took steps to affirmatively hide from ICO investors,” according to the Department of Justice statement.
McAfee and Watson also allegedly took active steps to conceal their secret compensation arrangements with ICO issuers from ICO investors, and “McAfee made false and misleading statements and omissions to hide such deals from ICO investors.”
McAfee over the years has been known as an eccentric personality who is no stranger to controversy. He has twice run for president and is currently being held in Spain on unrelated tax evasion charges.
Read the details of the charges here.
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