July 12, 2024


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John McAfee indicted on cryptocurrency fraud charges

John McAfee

Paula Bustamante | AFP | Getty Images

Federal prosecutors on Friday accused antivirus software company founder John McAfee and his associate of orchestrating fraudulent schemes to rake in millions of dollars from cryptocurrency investors.

McAfee, 75, and his “cryptocurrency team” advisor Jimmy Watson, 40, allegedly engaged in an “age-old pump-and-dump scheme,” FBI Assistant Director William F. Sweeney Jr. said in a press release announcing the indictment in Manhattan federal court.

McAfee, who presents a larger-than-life online persona and has twice run for president, is currently being held in Spain, where he faces separate criminal tax evasion charges. McAfee resigned from the antivirus company he founded in 1994, but in 2013 created a profane parody video explaining how users can uninstall the software. In 2019, he was ordered to pay $25 million in damages over the killing of a former neighbor in Belize in 2012.

In the “scalping” scheme, McAfee and his team allegedly bought large amounts of cheap cryptocurrency altcoins, then aggressively promoted them online with “false and misleading endorsement tweets” to artificially inflate their market prices.

“McAfee Team members collectively earned more than $2 million in illicit profits from their altcoin scalping activities,” the Department of Justice alleges.

The pair also used McAfee’s popular Twitter account to tout “various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives,” Manhattan U.S. Attorney Audrey Strauss said in the release from the Justice Department.

The team would use social media to tout crypto startups’ fundraising events while concealing that they were being compensated for the promotional tweets, the press release alleges.

McAfee, Watson and the rest of his team earned “more than $11 million in undisclosed compensation that they took steps to affirmatively hide” from investors, the grand jury indictment says.

McAfee and Watson are charged with commodities and securities fraud conspiracy, wire fraud conspiracy, wire fraud, touting fraud conspiracy and money laundering conspiracy.

Watson was arrested Thursday in Texas and will appear before a judge later Friday.

The press release noted that the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission have filed separate civil charges against McAfee and Watson.