John McAfee charged with fraud in cryptocurrency scam

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John McAfee, the antivirus software pioneer whose former firm still bears his name, has been indicted on fraud and money laundering conspiracy charges stemming from two cryptocurrency schemes, the US justice department announced on Friday.

Authorities accused McAfee and his bodyguard, Jimmy Gale Watson Jr, of exploiting McAfee’s large Twitter following to artificially inflate prices of “altcoins” through a so-called pump-and-dump scheme, and concealing payments McAfee received from start-up businesses to promote initial coin offerings (ICO).

The justice department stated that John McAfee and his accomplices reaped more than US$13-million from their cryptocurrency fraud. The charges were brought in Manhattan federal court. The Commodity Futures Trading Commission filed related civil charges concerning the alleged pump-and-dump scheme. Manhattan US attorney Audrey Strauss said in a statement: “As alleged, McAfee and Watson exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception.”

Detained in Spain

Lawyers for McAfee could not immediately be identified. McAfee is being detained in Spain following his arrest there on tax evasion charges which was announced in October, the justice department said.

Watson was arrested on Thursday night in Texas, the department added.

Watson’s attorney, Arnold Spencer, stated: “Jimmy Watson is a decorated veteran and former Navy Seal. He fought for other people’s rights and liberties, and he is entitled to and looks forward to his day in court to exercise some of those very rights.”

“Authorities accused McAfee of telling followers he had no stake in the coins, even as he touted how they ‘will change the world.”

Both also face civil charges by the US Securities and Exchange Commission, which in October accused McAfee of concealing more than $23.1-million he made from boosting seven crypto offerings on Twitter.

In the cryptocurrency cases, authorities said McAfee touted assets including verge, reddcoin and dogecoin as part of a “Coin of the Day” or “Coin of the Week” tweet from around December 2017 to February 2018.

Authorities said McAfee held himself up as an expert on cybersecurity and cryptocurrency through his tweets, speeches and his role as a CEO of a publicly traded cryptocurrency firm. They also accused him of telling followers he had no stake in the coins, even as he touted how they “will change the world”.

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