John McAfee charged with fraud for pushing cryptocurrencies, could face even more prison time

Former antivirus guru, Libertarian presidential hopeful, and international fugitive John McAfee has been charged with crimes including fraud and money laundering over his promotion of cryptocurrencies on social media several years ago. 

"Coin of the day: Reddcoin (RDD) - a sleeper - most widely used social network coin in the world - flying under the radar since 2014. Working with every Social Media platform, it is the only currency that many children under the age of 10 have ever known.  https://reddcoin.com," McAfee tweeted on December 24, 2017. In January 2018 he went with a simpler, “Coin of the week: DOGE.”

There were plenty of others.

"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 US 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."

McAfee, Watson, and others allegedly ran two separate schemes between December 2017 and October 2018. The first was a "pump and dump" in which McAfee promoted various cryptocurrencies in order to artificially drive up their value (the "pump") and then sold most or all of his holdings in them at inflated prices (the "dump"), while the second involved the promotion of "initial coin offering" fundraising events without disclosing that a significant portion of the money raised would actually go to McAfee and his associates. Strauss said that McAfee and the rest of his crypto-team collectively pulled in more than $13 million through the schemes.

As a result of their efforts, McAfee and Watson are each facing seven charges in total:

• One count of conspiracy to commit commodities and securities fraud (maximum sentence five years)
• One count of conspiracy to commit securities and touting fraud (maximum sentence five years)
• Two counts of conspiracy to commit wire fraud (maximum sentence 20 years)
• Two counts of substantive wire fraud (maximum sentence 20 years)
• One count of conspiracy to commit money laundering (maximum sentence ten years)

On top of the criminal charges, McAfee is also facing civil charges (via The Verge) filed by the Commodity Futures Trading Commission, which sheds more detailed light on the specifics of the allegations against him. The filing states that McAfee and Watson "strategically selected digital assets that would be suited for the pump-and-dump scheme,” including Verge, Reddcoin, and Dogecoin, and then details the steps McAfee took to drive up their prices before selling; it also notes multiple instances where McAfee either denied he had holdings in cryptocurrencies he was promoting, or claimed that his recommendations were for long-term investments.

"McAfee and Watson used social media to perpetrate an age-old pump-and-dump scheme that earned them nearly $2 million dollars," FBI assistant director William F. Sweeney Jr. said. "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's cryptcurrency tweets were undeniably influential. This Vice analysis from October 2018 found that "tweets from McAfee were reliably correlated with price spikes that sent cryptocurrencies worth pennies—even fractions of a penny—temporarily shooting upwards in value anywhere from 50 to 350 percent." It also noted that, even then, there were rumblings that McAfee was involved in pump-and-dump schemes.

His tweets were also wildly expensive: An old version of the McAfee Crypto Team website (available via the Internet Archive) reveals that McAfee charged $105,000 per tweet.

The fraud and money laundering charges are only the latest in a long list of legal troubles facing McAfee: He was indicted for tax evasion in October 2020, and also facing charges filed by the Securities and Exchange Commission for failing to disclose that he was being paid for promoting initial coin offerings. He's currently in custody in Spain, where he’s been fighting extradition since his arrest last year.