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The
U.S. Justice Department announced the charges shortly after the
Securities and Exchange Commission revealed it had brought civil
charges against McAfee, alleging that he made over $23.1 million
in undisclosed compensation from recommending seven
cryptocurrency offerings on Twitter that were materially false
and misleading.
The indictment, filed under seal in June, was unsealed following
his arrest in Spain where the United States is seeking to
extradite him.
He is alleged to have earned millions in income from promoting
cryptocurrencies, as well as through consulting work, speaking
engagements, and selling the rights to his life story for a
documentary. Despite this income, the Justice Department said he
failed to file any tax returns from 2014 to 2018.
The SEC has alleged that from at least November 2017 through
February 2018, McAfee recommended cryptocurrencies he was paid
to promote, while falsely denying such payments.
"McAfee leveraged his fame to make more than $23.1 million in
undisclosed compensation" by recommending at least seven initial
coin offerings or ICOs to his Twitter followers, the SEC said.
McAfee's recommendations were "materially false and misleading,"
in that he tried to sell "virtually worthless" cryptocurrency
tokens by encouraging investors to buy the securities without
disclosing his own holdings, the SEC alleged.
The SEC is seeking to impose on McAfee a civil penalty as well
as disgorgement of ill-gotten gains, with interest. The agency
also wants to ban him permanently from serving as an officer or
director of any listed company or any company that files reports
to the agency.
The SEC is also pursuing charges against Jimmy Gale Watson, Jr.,
a bodyguard to McAfee, on charges he aided and abetted the sale
of the digital currencies, among other allegations.
"Potential investors in digital asset securities are entitled to
know if promoters were compensated by the issuers of those
securities," said Kristina Littman, the SEC's cyber unit chief.
"McAfee, assisted by Watson, allegedly leveraged his fame to
deceptively tout numerous digital asset securities to his
followers without informing investors of his role as a paid
promoter."
(Reporting by Katanga Johnson and Sarah N. Lynch in Washington,
D.C.; Additional reporting by Ayanti Bera in Bengaluru; Editing
by Anil D'Silva, Cynthia Osterman and Richard Chang)
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