The US has indicted antivirus software creator John McAfee for using his Twitter account to allegedly “pump-and-dump” several cryptocurrencies.
McAfee has been a major supporter of cryptocurrencies. However, federal officials claim he secretly bought the touted currencies for cheap, and then sold them off at inflated prices, thanks to his Twitter followers following his investment advice.
On Friday, federal officials unsealed an indictment charging McAfee and his business partner, Jimmy Watson, with securities fraud and conspiracy to commit money laundering.
“As alleged, McAfee and Watson used social media to perpetrate an age-old pump-and-dump scheme that earned them nearly two million dollars,” FBI Assistant Director William Sweeney Jr. said in the announcement.
According to investigators, the pump-and-dump scheme took place between December 2017 and October 2018, when McAfee had around 784,000 followers on Twitter. The cryptocurrencies and tokens he endorsed included Verge, Electroneum, Burstcoin, Dogecoin, and Tron, among others. The FBI also notes after he touted and sold the cryptocurrencies, their value then dramatically fell a year after.
“Additionally, [McAfee and his associates] allegedly used the same social media platform to promote the sale of digital tokens on behalf of ICO (initial coin offering) issuers without disclosing to investors the compensation they were receiving to tout these securities on behalf of the ICO,” Sweeney added. The ICO schemes ended up bringing in another $11 million, for a total of $13 million.
The charges are similar to a civil lawsuit the SEC filed against McAfee in October for fraudulently touting the cryptocurrencies. However, the indictment from the US Justice Department includes criminal charges, which means McAfee could face jail time if convicted.
McAfee is currently detained in Spain on separate criminal charges the US filed against him in October for tax evasion. According to federal officials, McAfee earned millions in promoting the cryptocurrencies, but failed to pay taxes on them.
McAfee hasn’t commented on the charges, but he’s been fighting his extradition to the US while he remains imprisoned in Spain. In the meantime, federal officials say they arrested his business partner, Jimmy Watson, in Texas on Thursday.
