SEC Charges John McAfee and Bodyguard with Fraudulently Touting ICOs
The Securities and Exchange Commission has charged John McAfee, the founder of international computer security software giant McAfee, for promoting investments in initial coin offerings to his Twitter followers.
The Securities and Exchange Commission has charged John McAfee, the founder of international computer security software giant McAfee, for promoting investments in initial coin offerings to his Twitter followers without disclosing that he was paid to do so. McAfee’s bodyguard, Jimmy Watson Jr., was also charged. McAfee was arrested in Spain on Monday for tax evasion.
According to the SEC, McAfee promoted multiple ICOs on Twitter, allegedly pretending to be impartial and independent even though he was paid more than $23 million in digital assets for the promotions. When certain investors asked whether he was paid to promote the ICOs, McAfee allegedly denied receiving any compensation from the issuers.
The complaint alleges that McAfee made other false and misleading statements, such as claiming that he had personally invested in some of the ICOs and that he was advising certain issuers.
The complaint alleges that Watson assisted McAfee by negotiating the promotion deals with the ICO issuers and helped McAfee cash out the digital asset payments for the promotions. The SEC also claims that Watson, who was purportedly paid at least $316,000 for his role, had his then-spouse tweet interest in one of the ICOs that McAfee was promoting.
The SEC said that McAfee and Watson engaged in a separate scheme to profit from a digital asset security by secretly accumulating a large position in McAfee’s accounts, touting that security on Twitter while intending to sell it, and then selling the holdings as the price rose.
“Potential investors in digital asset securities are entitled to know if promoters were compensated by the issuers of those securities,” said Kristina Littman, cyber unit chief. “McAfee, assisted by Watson, allegedly leveraged his fame to deceptively tout numerous digital asset securities to his followers without informing investors of his role as a paid promoter.”
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges McAfee and Watson with violating antifraud provisions of the federal securities laws, McAfee with violating the anti-touting provisions, and Watson with aiding and abetting McAfee’s violations.
The complaint seeks permanent injunctive relief, conduct-based injunctions, return of allegedly ill-gotten gains, and civil penalties. The SEC also seeks to bar McAfee from serving as a public company officer and director.
The quixotic businessman has had multiple run-ins with both the U.S. and foreign governments over the last decade. In July 2019, he and members of his entourage were arrested in the Dominican Republic on suspicion of carrying high-caliber weapons and ammunition while on his yacht. They were released four days later.
He made headlines over the summer for claiming that he was arrested and assaulted by police in Norway for refusing to replace a pair of lace thong panties with a face mask to protect against COVID-19.
And just yesterday, at the request of the U.S. Department of Justice, he was arrested in Spain for tax evasion. The indictment alleges he earned millions in income from promoting cryptocurrencies, consulting work, speaking engagements, and selling the rights to his life story for a documentary. From 2014 to 2018, McAfee allegedly failed to file tax returns, despite receiving considerable income from these sources.
If convicted of the tax charges, he faces a maximum sentence of five years in prison on each count of tax evasion and a maximum sentence of one year in prison on each count of willful failure to file a tax return. McAfee also faces a period of supervised release, restitution, and monetary penalties.
