Federal prosecutors have arraigned noted cybersecurity eccentric John McAfee for securities and wire fraud for misleading financiers at the peak of the last cryptocurrency boom. In late 2017 and early 2018, McAfee prompted his numerous thousands of Twitter followers to buy a number of obscure cryptocurrencies. Prosecutors state he failed to disclose his own monetary stake in those tokens– and in many cases outright lied about it.
McAfee has actually been in custody in Spain considering that his arrest at a Barcelona airport last October. He was currently dealing with extradition to the United States on tax evasion charges; the self-described Libertarian hasnt filed an income tax return for several years. Now he will face surcharges of securities and wire scams along with bodyguard Jimmy Watson, who presumably helped McAfee perform some of his pump-and-dump schemes.
The criminal problem covers much of the very same ground as a civil lawsuit filed by the Securities and Exchange commission at the time of his arrest last October.
” I am not pumping for my gain”
District attorneys state McAfee engaged in 2 types of prohibited schemes. In one, he would purchase an obscure cryptocurrency, talk it up on Twitter, and then unload it at a greater rate. In other cases, he would accept hype up a brand-new cryptocurrency sale on Twitter in exchange for a cut of the proceeds.
Buying and promoting cryptocurrencies isnt necessarily prohibited on its own. The issue, district attorneys state, is that McAfee tried to increase the efficiency of his recommendations by incorrectly declaring that he had no financial stake in his suggestion. The government says that made his actions a violation of federal fraud statutes.
District attorneys say that around December 20, 2017, McAfee purchased more than $100,000 of the unknown cryptocurrency Electroneum (ETN). The next day, he tweeted that he d gotten “more than one DM” informing him that Electroneum was “the holy grail of cryptocurrency.”

Expand/ John McAfee on his luxury yacht off the coast of Cuba in 2019. Adalberto ROQUE/ AFP/ Getty

Prosecutors say McAfee engaged in two types of illegal schemes. The issue, district attorneys state, is that McAfee tried to improve the efficiency of his endorsements by incorrectly claiming that he had no monetary stake in his recommendation. Prosecutors state McAfee in fact was pumping for his gain. Prosecutors state that McAfee participated in numerous direct message discussions going over the SEC guidelines.
He said he wanted McAfee coin to be “a genuine entity that the SEC can not come into a year down the line and say Mr. McAfee youre under arrest.

Prosecutors state McAfee in fact was pumping for his gain. The rate of ETN jumped by 40 percent in the hours after McAfee tweeted about it.
In another case, also in December 2017, the developer of a new cryptocurrency called SETHER guaranteed to pay McAfee 30 percent of the profits from the SETHER ICO. McAfee was likewise expected to get “a substantial percentage” of the newly produced SETHER tokens. In exchange, McAfee agreed to tweet that the coin was “the very first token to open the door to a new paradigm of social marketing,” amongst other things.
On Twitter, somebody asked him if he got paid to promote tokens like SETHER.
” I do not,” he responded. “I simply sort through the mass [of] tokens to find the gems and share them.” Though he did claim that he had “been advising them on cyber security.”
The same day, McAfee composed independently to SETHERs founder: “For the next couple of weeks, take my name off your website,” he recommended. “I desire to be able to leverage my Twitter with individuals presuming I have no relationship with you. Removing my name now will add at least a million dollars to your sale.”
The next month, as he was touting an initial coin offering for a token called PODONE, McAfee ended up being indignant at accusations that he was being paid to promote cryptocurrencies:
Why does everyone presume I fucking get paid for everythings I tell people to examine out ???????? Cant I fucking point out products of interest? How much do you make at your work ??– John McAfee (@officialmcafee) January 24, 2018
In total, federal district attorneys say that McAfee made more than $13 million through deceptive cryptocurrency advertising plans.
Prosecutors say McAfee understood he was breaking the law
Just weeks previously, the Securities and Exchange Commission had explicitly alerted that celebrities might be breaking the law if they promote a cryptocurrency offering without disclosing that they have a monetary stake in it.
According to federal district attorneys, McAfee did the opposite. Prosecutors state that McAfee took part in numerous direct message conversations discussing the SEC guidelines.
In a December 16 speech, McAfee declared he was working on a new cryptocurrency called McAfee Coin– as far as I can inform, that project never ever pertained to fulfillment
” I am actually attempting to comply with the letter of the law,” McAfee stated. He stated he desired McAfee coin to be “a genuine entity that the SEC can not enter a year down the line and say Mr. McAfee youre under arrest. Thats going to occur to a lot of tokens, I assure you.”
In a December tweet, McAfees wife stated that life in prison has “quickly degraded” McAfees 75-year-old body and has “virtually destroyed his health. Hes lost near 30 pounds now and has significant issues internally.”

McAfee denied it when someone asked McAfee if he was invested in ETN himself.
” I own no ETC,” he tweeted, according to the indictment. “I am not pumping for my gain. I am showing you the unbelievable value of supporting a coin that will alter the world.”