In the evening on December 20, 2017, controversial cybersecurity pioneer John McAfee tweeted that he would embark on a bit of an educational blitz. “Starting tomorrow, I’ll talk every day about a unique altcoin,” McAfee wrote. “Most of the 2,000 coins are rubbish or rubbish. I have read all the white papers. The few to whom I am connected I will tell you. The rest I have no position. It is this last fragment that caught the attention of the Department of Justice.
On Friday, the U.S. Attorney for the Southern District of New York charged McAfee and Assistant Executive Jimmy Watson with several charges that encompass two alleged cryptocurrency schemes. (McAfee was previously charged in October with separate tax evasion charges.) According to court documents, McAfee and its associates received $ 13 million combined between the two efforts, which were based on the use of the popular account. of McAfee’s Twitter to drive niche cryptocurrencies or promote initial coin offerings without revealing that it would benefit, either through investment gains or promotional commissions.
“As expected, McAfee and Watson exploited a widely used social media platform and the enthusiasm among emerging market cryptocurrency investors to make millions through lies and deceptions,” said Manhattan lawyer Audrey Strauss, in a press release. “Defendants allegedly used McAfee’s Twitter account to post messages to hundreds of thousands of its Twitter followers promoting various cryptocurrencies through false and misleading statements to hide their true self-interested motives.”
Pump You Up
The altcoin conversations that McAfee promoted were a supposed leg of this deception. In mid-December 2017, he allegedly directed a partner to buy $ 5,000 worth of tokens at XVG, also known as Virgo. That same day on Twitter, McAfee described XVG, along with more established tokens like Monero and Zcash, as a currency it “can’t lose.” Two days later, when a Twitter user suggested McAfee had “pumped” XVG, artificially inflating its value to sell high, McAfee responded with outrage. “I don’t have any XVGs,” he said he wrote. “I live [sic] as the shallow ones you cannot distinguish between someone who speaks shamelessly of his mind (because it is true) and someone with a later motive. You know absolutely nothing about me if you think I have time to waste rubbish. “
XVR rose 500 percent in the four days following McAfee’s initial tweet. McAfee, according to prosecutors, sold near the top, making a net profit of $ 30,000.
It seems that this success inspired what McAfee would call his “Coin of the Week” series. The same day he announced his trip to “unique altcoins” on Twitter, McAfee allegedly ordered an associate to put $ 100,000 bitcoins in Electroneum tokens. On December 21, 2017, he he tweeted a brilliant report with spikes on ETN, which included the claim that it had “more than one DM who called Electroneum the holy grail of cryptocurrency.” (Contrast what McAfee had tweeted a week earlier December 15th: “Personally I don’t find anything about Electroneum that I would like to talk about. It’s not that it’s bad, it’s just not special to me. ”) He again claimed which he possessed none of.
The Electoneum jumped 40% that day. The McAfee associate earned revenue, prosecutors say.
Judicial documents allege a foam, rinsing, repetition of this basic scheme that ran until January 28 of the following year. McAfee would instruct its partner to buy “hundreds of thousands or even millions of tokens” on the altcoin filed this week less than 10 days before filing it. McAfee would extol the virtues of BURST, DGB, RDD, HMQ, TRX, FCT, DOGE, XLM, SYS and RCN. His associate, prosecutors say, would close the position soon after to benefit from the usual bulge. In all, they allegedly pocketed $ 2 million from the bombing and dumping program, including hundreds of thousands from Dogecoin alone.