SEC obtains final judgment against Jimmy Watson in ICO fraud case
The Securities and Exchange Commission (SEC) has obtained a final judgment against Jimmy Gale Watson in an ICO fraud case.
On July 14, 2022, Judge John G. Koeltl issued the judgment as to Watson. The defendant is permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly to employ any device, scheme, or artifice to defraud.
Watson is liable for disgorgement of $316,401.48, representing net profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $59,533.38.
Also, the Judge signed an order dismissing the SEC claims as to John David McAfee. The CFTC has also abandoned its case against McAfee due to his death.
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.