The evening On December 20, 2017, controversial cybersecurity pioneer John McAfee tweeted that he would be embarking on some sort of educational blitz. “Starting tomorrow, I will be talking about a single altcoin every day,” McAfee wrote. “Most of the 2,000 pieces are garbage or scams. I have read all the white papers. The few people I’m connected with, I’ll tell you. The rest, I have no position. It was this last element that caught the attention of the Department of Justice.
The Southern District of New York City Attorney’s Office on Friday indicted McAfee and his executive assistant Jimmy Watson with multiple counts encompassing two alleged cryptocurrency schemes. (McAfee was previously indicted in October on separate tax evasion charges.) According to search documents, McAfee and his associates raised a combined $ 13 million between the two efforts, both of which relied on using McAfee’s popular Twitter account to promote niche cryptocurrencies or promote initial coin offerings without revealing that he made a profit from it, either through investment gains or promotional costs. .
“As alleged, McAfee and Watson have exploited a widely used social media platform and the enthusiasm of investors in the emerging cryptocurrency market to earn millions through lies and deception,” the American Manhattan lawyer Audrey Strauss in a press release. “The defendants allegedly used McAfee’s Twitter account to post messages to hundreds of thousands of its Twitter followers touting various cryptocurrencies through false and misleading statements to cover up their true personal motives.”
The altcoin talks that McAfee promoted were one of the alleged legs of this deception. In mid-December 2017, he allegedly ordered an associate to buy approximately $ 5,000 worth of tokens in XVG, also known as Verge. The same day on Twitter, McAfee described XVG – with more established tokens like Monero and Zcash – as a coin that “cannot lose”. Two days later, when a Twitter user suggested that McAfee had “pumped” XVG, artificially inflating its value in order to sell high, McAfee responded indignantly. “I do not have an XVG”, he wrote. “I live [sic] how superficial people can’t distinguish between someone who shamelessly says what they think – because it’s true – and someone with an ulterior motive. You know absolutely nothing about me if you think I have time to waste garbage.
XVR rose 500% within four days of McAfee’s initial tweet. McAfee, according to prosecutors, sold near the top, making a net profit of $ 30,000.
This success seems to have inspired what McAfee would call his “Piece of the Week” series. On the same day he announced his trip to “unique altcoins” on Twitter, McAfee allegedly asked an associate to put $ 100,000 worth of bitcoins into Electroneum tokens. On December 21, 2017, he tweeted a laudatory and bulleted report on ETN, including a claim that he had “more than one DM calling Electroneum the holy grail of cryptocurrency.” (This is quite a contrast to what McAfee had tweeted a week earlier, on December 15: “Personally, I can’t find anything on Electroneum that I would like to talk about. Not that it’s bad, but not special to me. “) He again claims that he did not have one.
Electoneum jumped 40% that day. McAfee’s partner cashed in at a profit, prosecutors said.
Court documents allege that foaming, rinsing, repetition of this basic pattern took place until January 28 of the following year. McAfee would ask his associate to buy “hundreds of thousands, if not millions of tokens” in the altcoin presented this week less than 10 days before presenting it. McAfee extolled the virtues of BURST, DGB, RDD, HMQ, TRX, FCT, DOGE, XLM, SYS and RCN. His partner, prosectors say, would close the position soon after to take advantage of the usual bump. In all, they would have pocketed $ 2 million from the pump and dump system, including hundreds of thousands of Dogecoin alone.