You might remember John McAffee’s surname from the days when we were inundated with advertisements for “McAfee Antivirus” software, which was one of the major players in the antivirus market for a long stretch.
However, now the name has a different association, as McAfee made headlines this week after being indicted in a federal court for a number of cryptocurrency schemes that the former king of antivirus software allegedly engaged in with a partner, printing millions in profits through illegal pump-and-dump schemes, according to the Washington Examiner.
The now 75-year-old McAfee, along with partner Jimmy Watson Jr., were brought up on charges by the U.S. Attorney for the Southern District of New York, specifically for their involvement in the illegal promotion of what are called “altcoins,” which, in layman’s terms, are the penny stocks of the cryptocurrency world.
Given McAfee’s sizeable social media following, specifically on Twitter where he had over one million followers, the two would use his online influence to hype various altcoins, with “false and misleading endorsement tweets,” causing followers to buy them which artificially inflated the price.
Shortly after, at whatever they presumably believed was the highest point an artificially-inflated altcoin would hit, McAfee and his partner would sell their holdings and pocket large chunks of money. Between December 2017 and December 2018, the two raked in over $2 million, which isn’t bad for posting a few tweets.
The ultimate problem behind those tweets in which they convinced their followers into buying is the fact that they didn’t reveal that they were holding large shares of the altcoins, which is a big, giant no-no.
That wasn’t the only altcoin inflation scheme the two were allegedly involved in. Another angle was to partner with those who were launching new altcoin offerings — comparable to a company first going public on the stock market with an initial public offering.
They would strike a deal with those behind a new altcoin, hype it up with their social media influence, and rake in a large portion of the proceeds from the offering, all the while not disclosing to their followers that they stood to gain substantial profits from the promotion of the initial coin offering.
Both alleged fraudsters were hit with a laundry list of federal charges and McAfee is currently in a Spanish jail for a separate case. Overall, McAffee and Watson managed to pull down some $11 million in undisclosed profits using their scheme and, if proven guilty, will likely be hit with lengthy sentences.