McAfee and his advisor indicted over cryptocurrency fraud

The Department of Justice (DoJ) in the United States has today unsealed an indictment against John McAfee and his advisor at his cryptocurrency team, Jimmy Gale Watson Jr. The DoJ said that the pair conspired to commit fraud by promoting cryptocurrencies and was able to sell the cryptocurrency for $13 million due to McAfee's large Twitter following and the enthusiasm of investors.

According to the DoJ, Jimmy Gale Watson Jr. was arrested last night in Texas while John McAfee is already detained in Spain on other criminal charges that were previously filed by the DoJ’s Tax Division.

Commenting on the DoJ’s statement, FBI Assistant Director William F. Sweeney Jr. said:

“As alleged, McAfee and Watson used social media to perpetrate an age-old pump-and-dump scheme that earned them nearly two million dollars. Additionally, they allegedly used the same social media platform to promote the sale of digital tokens on behalf of ICO issuers without disclosing to investors the compensation they were receiving to tout these securities on behalf of the ICO. When engaging in illegal activity, simply finding new ways to carry out old tricks won’t produce different results. Investment fraud and money laundering schemes carry a strict penalty under federal law.”

According to the DoJ, the cryptocurrency team headed by McAfee leveraged Twitter to promote altcoins to McAfee’s Twitter followers stoking enthusiasm. When the price began to rise for these altcoins, McAfee’s team attempted to liquidate their proceeds into United States dollars. but a year after McAfee’s Tweets, those who had invested saw a substantial decline in the price of the altcoins.

In another scheme, the team promoted initial coin offerings for which they were compensated. To do this legitimately, it would have had to disclose the compensation but instead, it proactively hid the fact that it was receiving money for the promotions.

The two men now face several different charges which in total carry prison sentences of up to 100 years as well as financial penalties.