On March 5, 2021, the U.S. District Courtroom for the Southern District of New York unsealed an indictment charging John McAfee, the founding father of McAfee antivirus software program firm, together with the chief advisor of his cryptocurrency crew, Jimmy Watson Jr. The pair face costs on seven counts together with wire fraud, cash laundering, and conspiracy to commit commodities and securities fraud by touting and scalping. Watson had been arrested in Texas the evening earlier than the indictment was introduced, and McAfee stays detained in Spain awaiting extradition to the USA on tax fraud costs filed in October 2020.
The indictment claims that McAfee and his crew had been concerned in quite a lot of fraudulent schemes together with touting varied cryptocurrencies over Twitter by means of false statements after which withdrawing income after these statements brought on the property to extend in worth. In lots of of those conditions, McAfee had been compensated to endorse the cryptocurrencies, however his public statements didn’t point out this truth.
The indictment alleges that McAfee and his crew had been conscious of their obligations to reveal their compensation. After bloggers made point out of his obligations, McAfee and his crew used pseudonymous accounts to proceed the exercise. From December 2017 by means of October 2018, the criticism alleges McAfee and Watson used social media platforms to publish deceptive statements concerning preliminary coin choices, cryptocurrencies to buy, and different schemes to induce buyers into buying these property. The alleged scheme earned the crew greater than $13 million in income.
Small digital property—like penny shares—are notably prone to cost strikes from fraudulent exercise. They’re thinly traded, their holdings are largely nameless, and there’s sufficient market pleasure about cryptocurrency that effectively positioned assertion, particularly by celebrities, may cause adequate market exercise to maneuver costs rapidly. Combining that with a social media platform that reaches hundreds of potential market contributors rapidly and effectively and you’ve got the makings of what the Division of Justice has referred to as “an age-old pump-and-dump scheme.”
The U.S. Authorities, together with the Securities and Trade Fee and the Commodities Futures Buying and selling Fee, have warned buyers about these schemes by means of paperwork comparable to The DAO Report and the SEC FinHub web site, notably with respect to celebrities. We’ll proceed to observe Commodity Futures Trading Commission v. McAfee et al. and U.S.A v. McAfee et al. as they develop.
© 2020 BARNES & THORNBURG LLPNationwide Regulation Assessment, Quantity XI, Quantity 72