After Targeting BitMEX, SEC Takes On John McAfee, Who Made Over $23M From Fraudulent ICO Promotions
SEC’s next target, finally, is John McAfee. In just a week, the US Securities and Exchange Commission went after BitMEX, and the 74-year-old software magnate turned crypto bull.
McAfee was reportedly nabbed in Spain today and is now facing extradition to the US over charges of fraud for promoting initial coin offering (ICO) and tax evasion, facing a maximum sentence of five years in prison on each count of it.
McAfee earned millions in income from promoting cryptocurrencies and other activities and failed to file tax returns from 2014 to 2018, “despite receiving considerable income from these sources,” as per the indictment.
The cybersecurity entrepreneur allegedly evaded his tax liability by directing his income to be paid into crypto exchange accounts and bank accounts in the names of nominees. The DOJ also details that they didn’t find any connection with the “anti-virus company bearing his name.”
While DOJ’s charges against McAfee are a bit dry, SEC’s 55-page filing is far more interesting that details McAfee’s alleged fraudulent activity promoting several ICOs throughout 2017 and 2018. The SEC complaint reads,
“McAfee leveraged his fame to make more than $23.1 million U.S. Dollars (“USD”) in undisclosed compensation by recommending at least seven “initial coin offerings” or ICOs to his Twitter followers. The ICOs involved the offer and sale of digital asset securities and McAfee’s recommendations were materially false and misleading for several reasons.”
The suit doesn't mention the name of the ICOs but points out that he did not disclose that he was being paid for ICO promotions, violating federal security laws, and even lied to investors by falsely denying that he was paid by the issuers.
He also falsely claimed himself as the investor and technical advisor when in reality, his tweets “were paid promotions disguised as impartial investment advice.”
SEC claims McAfee’s bodyguard, Defendant Watson, also substantially assisted him in his schemes and negotiated the deals with ICO issuers for which he was paid at least $316,000.
McAfee himself received over $11.6 million in Bitcoin and Ether and an additional $11.5 million worth of promoted tokens, “as undisclosed compensation for his promotions of seven ICOs.”
The lawsuit also mentions John McAfee promising to “eat my d**k on national television” if his $1 million BTC price prediction didn’t pan out, which of course, didn’t and later he called it a “ruse.”
The SEC is seeking to get the defendants to pay civil monetary penalties, prohibiting them from participating, directly or indirectly, in the issuance, purchase, offer, or sale of any digital asset security, disgorge all ill-gotten gains received, and to get the investors appropriate relief.