U.S. charges virus-software pioneer
Prosecutors say McAfee defrauded cryptocurrency investors
Technology pioneer John McAfee has been charged with conspiracy to commit fraud and money laundering in a deceptive scheme to promote cryptocurrencies, federal prosecutors announced Friday.
In a newly unsealed indictment, the Justice Department alleged that McAfee and his business associate, Jimmy Watson, used McAfee’s Twitter account to tout cryptocurrencies to hundreds of thousands of followers, all while concealing from potential investors how they stood to gain from a run-up in prices.
Prosecutors alleged that McAfee, Watson and other members of McAfee’s cryptocurrency team took in more than $13 million by victimizing investors who had bought into a fraudulent scheme.
McAfee is detained in Spain, where he was arrested on criminal tax evasion charges filed by the Justice Department’s Tax Division. Justice Department officials have said that his extradition to the United States is pending. McAfee and Watson could not immediately be reached for comment Friday.
McAfee and his associates exploited the popularity of his
Twitter account to run what’s known as a “pump and dump” scheme, prosecutors allege.
McAfee and Watson first bought large quantities of cryptocurrencies at low prices. Then, they promoted those same digital tokens on Twitter to inflate their prices, using false endorsements and promising to disclose if they owned the cryptocurrencies that they were recommending. But these were false assurances, prosecutors claim; next came the “dump.”
After the prices of the cryptocurrencies swelled, McAfee and his associates sold off their holdings, often at significant profit, according to the indictment, leaving investors with assets whose long-term value had substantially declined. The scheme occurred in i 2017 and 2018, prosecutors said.
In October, McAfee was charged in federal court in Memphis with evading taxes after failing to file tax returns from 2014 to 2018.
McAfee, who developed early internet security software, also has been sought by authorities in the U.S. and Belize in the past.
In July 2019, McAfee was released from detention in the Dominican Republic after he and five others were suspected of traveling on a yacht carrying high-caliber weapons, ammunition and military-style gear, officials on the Caribbean island said at the time.