Article: Current Attempts To Define Regulator Roles in Cryptocurrency Enforcement Actions

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Current Attempts To Define Regulator Roles in Cryptocurrency Enforcement Actions

Kenneth M. Breen and Phara A. Guberman, 19 March 2021

On March 5, 2021, the U.S. Attorney’s Office for the Southern District of New York charged John McAfee and his former employee, Jimmy Gale Watson, with conspiracy, fraud, and money laundering charges in connection with his cryptocurrency activities—specifically McAfee’s Twitter statements touting various cryptocurrencies and his false and misleading statements concerning personal investments or other involvement with those same cryptocurrencies. The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have filed civil charges against McAfee and his former colleague in separate parallel actions, each based on a different aspect of McAfee’s alleged scheme. This case and the expected upcoming congressional task force on cryptocurrencies are likely to provide the market with more clarity on how coins and projects will be treated in investigations, including whether they can be treated as securities or commodities and the relative roles of the SEC and CFTC.

In the McAfee case, the first alleged part of the scheme is a pump-and-dump. A pump-and-dump scheme generally involves a party or entity acquiring a position in a financial instrument and then artificially inflating the value of that instrument before selling at an inflated price. In this case, McAfee and his team allegedly bought large quantities of various less popular than Bitcoin but publicly traded cryptocurrencies, such as Dogecoin, Reddcoin, and Verge. McAfee, a public figure of sorts because of his anti-virus software and social media following, then publicly endorsed and recommended a particular cryptocurrency on Twitter. When the value of that cryptocurrency increased, McAfee and his team sold their investments, earning a cumulative profit of approximately $2 million. According to the indictment, McAfee liquidated many of his cryptocurrency holdings through New York Stock-Exchange-based companies, implicating various securities laws.

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Article: Software Pioneer John McAfee Indicted In Crypto Case

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Software Pioneer John McAfee Indicted In Crypto Case

Reenat Sinay, 05 March 2021

Antivirus software innovator John McAfee and his bodyguard have been indicted on fraud and money laundering conspiracy charges for fraudulently touting various cryptocurrencies on Twitter to further two separate schemes, Manhattan federal prosecutors said Friday.

Between December 2017 and October 2018, McAfee and private security guard Jimmy Gale Watson Jr. tricked investors into buying over a dozen different digital currencies in a pair of scams that allegedly netted the two men a combined $13 million in profits, according to a seven-count indictment unsealed Friday. Watson was also “executive advisor” of McAfee’s so-called cryptocurrency team, prosecutors said. Continue reading “Article: Software Pioneer John McAfee Indicted In Crypto Case”

Article: John McAfee Indicted On Fraud, Money Laundering Charges In Pump-And-Dump Crypto Scheme

Article - Media, Publications

John McAfee Indicted On Fraud, Money Laundering Charges In Pump-And-Dump Crypto Scheme

Rachel Sandler, 05 March 2021

John McAfee was indicted on securities fraud and money laundering charges, the Justice Department announced Friday, adding to the antivirus software pioneer’s litany of legal problems stemming from more than a decade of sometimes bizarre behavior.

McAfee and an advisor of his cryptocurrency team, Jimmy Watson Jr., were indicted on several counts of conspiracy to commit commodities and securities fraud, wire fraud conspiracy and money laundering conspiracy offenses.

Prosecutors say McAfee and his cryptocurrency team used his Twitter account, which has a million followers, to promote Initial Coin Offerings without disclosing he was being paid by the ICO issuers to do so. Continue reading “Article: John McAfee Indicted On Fraud, Money Laundering Charges In Pump-And-Dump Crypto Scheme”