The United States Commodity Futures Trading Commission (CFTC) today filed a complaint against John David McAfee and Jimmy Gale Watson Jr.
The complaint, submitted at the New York Southern District Court, alleges that, from at least in or around December 2017 through at least in or around February 2018, John David McAfee, Jimmy Gale Watson Jr., and others engaged in a digital asset “pump and dump” manipulative and deceptive scheme in which they fraudulently recommended to the public to purchase digital assets such as verge, reddcoin, and dogecoin.
- identified digital assets with respect to which they believed McAfee’s promotional efforts could move the market,
- secretly accumulated positions in the digital assets in anticipation of deceptively promoting the digital assets online in order to cause price spikes;
- falsely and misleadingly endorsed the digital assets via Twitter and other media as recommended long-term investments that would “change the world,” thereby exploiting the broad reach of McAfee’s public Twitter account, while concealing Defendants’ true holdings and plan to liquidate the digital assets quickly; and
- secretly sold off most or all of Defendants’ holdings in these digital assets as prices rose sharply following McAfee’s endorsements.
This manipulative and deceptive scheme caused harm to market participants who paid inflated prices for the digital assets, the CFTC says.
The complaint alleges that the defendants obtained gains from the manipulative and deceptive scheme involving short-term trading of digital assets such as bitcoin and other digital assets for a profit of in excess of $2 million at then-prevailing bitcoin valuations, to the detriment of individuals who purchased the digital assets at inflated prices, including individuals in the United States.
The CFTC accuses the defendants of engaging in fraudulent and manipulative acts and practices in violation of the Commodity Exchange Act, and Commission Regulations.
The Commission seeks to enjoin such acts and practices and compel compliance with the Act. In addition, the CFTC pushes for civil monetary penalties and remedial ancillary relief, including, but not limited to, trading bans, restitution, disgorgement, rescission, pre- and post- judgment interest, and such other relief as the Court may deem necessary and appropriate.