John McAfee has been arrested and indicted for tax evasion, the U.S. Department of Justice announced. The cybersecurity entrepreneur has also been charged with fraudulently pumping cryptocurrencies by the U.S. Securities and Exchange Commission.
McAfee Fraudulently Pumped Tokens
The U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) independently announced their actions against two-time U.S. presidential candidate John McAfee on Monday.
The SEC has charged the 74-year-old antivirus software tycoon and his bodyguard Jimmy Watson Jr. with fraudulently pumping initial coin offerings (ICOs). The agency explained that from at least November 2017 to February 2018, “McAfee leveraged his fame to make more than $23.1 million U.S. dollars (‘USD’) in undisclosed compensation by recommending at least seven ‘initial coin offerings’ or ICOs to his Twitter followers.” He had approximately 784,000 Twitter followers at the time; that number has significantly grown to about a million at press time.
According to the SEC, the antivirus software pioneer did not disclose that he was being paid to promote the tokens, which constitutes “unlawful ‘touting’ and violates the federal securities laws.” Emphasizing that “The ICOs at issue involved the offer and sale of digital asset securities and McAfee’s recommendations were materially false and misleading for several reasons,” the SEC detailed:
The ICOs McAfee touted raised at least approximately $41 million and McAfee made approximately $23.2 million in secret compensation for his touts.
The SEC also noted that McAfee “lied to investors by falsely denying he was being paid by the issuers” when directly asked if he was being paid to promote the coins.
His paid promotions were exposed by a blogger in February 2018, rendering his tweets useless for pumping more ICOs. However, he still held “a large number of virtually worthless securities from the ICOs he had previously touted,”…