SEC marks progress in case against ICO fraudster John McAfee
The United States Securities and Exchange Commission (SEC) is making progress in effective service on computer programmer John McAfee, accused of fraudulently touting initial coin offerings (ICOs). This becomes clear from a letter filed by the regulator with the New York Southern District Court on February 15, 2021.
The document, seen by FX News Group, explains that the SEC began the process of attempting to serve McAfee via the Hague Convention on October 22, 2020. This is necessary, as McAfee is currently being detained in a Spanish prison, in connection with a related criminal case in the Western District of Tennessee. In December, the regulator said it was not clear whether and when service can be effected.
In today’s letter, the SEC explains that it has been in touch with the relevant Spanish authorities to inquire as to the status of Hague Convention service, and has recently learned that the relevant authorities expect to be able to serve McAfee imminently.
The SEC will inform the Court of any update to this process by April 15, 2021, or when Hague Convention service is effected, whichever is sooner.
Let’s recall that, in October 2020, the SEC charged John McAfee for promoting investments in initial coin offerings (ICOs) to his Twitter followers without disclosing that he was paid to do so. McAfee’s bodyguard, Jimmy Watson, Jr., was also charged for his role in the alleged scheme.
According to the SEC’s complaint, McAfee promoted multiple ICOs on Twitter, allegedly pretending to be impartial and independent even though he was paid more than $23 million in digital assets for the promotions. The complaint alleges that McAfee made false and misleading statements, such as claiming that he had personally invested in some of the ICOs and that he was advising certain issuers.
According to the complaint, while McAfee and Watson profited, investors were left holding digital assets that are now essentially worthless.
McAfee and Watson also allegedly engaged in a separate scheme to profit from a digital asset security by secretly accumulating a large position in McAfee’s accounts, touting that security on Twitter while intending to sell it, and then selling McAfee’s holdings as the price rose.
The SEC’s complaint charges McAfee and Watson with violating antifraud provisions of the federal securities laws, McAfee with violating the anti-touting provisions, and Watson with aiding and abetting McAfee’s violations.
The complaint seeks permanent injunctive relief, conduct-based injunctions, return of allegedly ill-gotten gains, and civil penalties. The SEC also seeks to bar McAfee from serving as a public company officer and director.