SEC Accuses John McAfee of Fraudulent Promotion of ICOs

Ritika Sharma
Ritika Kumari Sharma is an Economics Honors graduate from the University of Calcutta. She is completely into finance and believes that cryptocurrencies are the future. She is an enthusiast learner about the cryptocurrency and blockchain technology.
  • McAfee is charged for promoting to invest in initial coin offerings (ICOs) via Twitter
  • The SEC outlined the violations in a 55-page complaint filed on Monday in the U.S. district cour

A latest tweet from the U.S. Securities and Exchange Commission revealed that the founder of software company McAfee is charged for promoting to invest in initial coin offerings (ICOs) via Twitter, without disclosing that he was compensated to do so. McAfee’s bodyguard, Jimmy Gale Watson is also charged for his role in the claimed scheme.

What did the Securities and Exchange Commission complain about?

The SEC outlined the violations in a 55-page complaint filed on Monday in the U.S. district court. John McAfee, a cybersecurity pioneer promoted multiple ICOs on Twitter, and pretended to be unbiased and independent, though he was paid more than $23 million in the form of digital assets for promoting. It is also disclosed that he promoted 7 ICOs in 2017 and 2018. When he was asked by certain investors whether he was paid for promoting or not, he allegedly denied receiving any compensation from the issuers. As per a press release from SEC it is found that he gave another false and misleading statement, that he personally has invested in several ICOs and was counselling certain issuers. It is also revealed that Watson was also paid around $316,000 for his role in the fraudulent. It is also revealed that while McAfee and Watson were creating profits, investors were left holding some cryptocurrencies that are now essentially worthless.

McAfee and Watson were also engaged in a separate scheme to make profit from digital asset securities. They were secretly accumulating a large position in the companies account, and pushing that security on Twitter while intending to sell those, and then after the multiplication of  price , they used to sell those McAfee’s holdings.

The SEC also mentioned that McAfee used to post predictions on increasing prices of BTC, and used many derogatory remarks which was publically criticized. 

What did the SEC seek with these charges on McAfee?

The filed complaint form the SEC is seeking for permanent injunctive relief, conduct-based injunctions, return of ill-gotten gains, and civil penalties to be charged on them. Moreover the SEC also wants to prohibit McAfee from serving as a public company officer and director in the future.

Kristina Littman, Cyber Unit Chief, whether the promoters are compensated by the issuers or not, should be known to the potential investors.

Notably, never make any decision of investment based on celebrity endorsement, or other information you receive via social media, e-mail, or any research website etc. Always consider in light of your own investment goals and risk tolerance.

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