John McAfee, founder of the giant antivirus and cybersecurity firm that bears his name, has been indicted in federal court in Manhattan for charges related to securities fraud and money laundering, the Department of Justice announced Friday.
McAfee and his former bodyguard and “executive adviser,” Jimmy Gale Watson Jr., are accused of engaging in a “pump and dump” scheme in which they would artificially inflate the market value of certain cryptocurrencies by encouraging McAfee’s million-plus Twitter followers to invest in them.
The pair encouraged followers to invest in the coins “without disclosing that they had taken investment positions in those altcoins with the intention of selling them in the short term,” according to the complaint filed in the Southern District of New York. After prices had gone up following tweets promoting the cryptocurrencies, the pair would then sell off their own holdings at the higher prices, prosecutors said. The scheme allegedly went on between December 2017 to October 2018.
“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,” Manhattan U.S. Attorney Audrey Strauss said in a statement. “The defendants allegedly used McAfee’s Twitter account to publish messages to hundreds of thousands of his Twitter followers touting various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives.”
McAffee, Watson, and others involved in the “McAfee Team” are said to have made around $13 million in the alleged scheme.
Watson, who has also been indicted, was arrested Thursday night in Texas for his alleged role in the schemes. McAfee is currently imprisoned in Spain on separate U.S. tax evasion charges. Both men face a total of seven charges under Friday’s indictment, including money laundering and several forms of fraud.
McAfee was well known for tweeting out profanity-laced investment advice to his followers—regularly pushing a “Coin of the Day” or “Coin of the Week.” He famously announced in 2017 that he would “eat his own dick” on live television if the valuation of bitcoin stock didn’t crest $500k in a few years. He later refused to put his money where his mouth was when it became apparent that wasn’t going to happen.
Comments like the “dick eating” one may be the kind of claims federal prosecutors are now focusing on. FBI Assistant Director William F. Sweeney Jr. described the way in which McAfee and Watson allegedly pushed for the adoption of apparently dodgy crypto investments:
“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.”
McAfee is already in lots of trouble. In addition to his arrest in Spain last year on tax evasion charges, he has been accused of a long list of crimes, including killing his neighbor in Belize in 2012. McAfee denies any involvement in the man’s death. He is currently awaiting extradition to the U.S.