The U.S. Securities and Exchange Commission filed suit against crypto investor and promoter John McAfee for his past promotion of initial coin offerings (ICOs) on social media.
Per the complaint:
“From at least November 2017 through February 2018, McAfee leveraged his fame to make more than $23.1 million U.S. Dollars (“USD”) in undisclosed compensation by recommending at least seven “initial coin offerings” or ICOs to his Twitter followers. The ICOs at issue involved the offer and sale of digital asset securities and McAfee’s recommendations were materially false and misleading for several reasons.”
Specifically, McAfee was accused of not disclosing “that he was being paid to promote the ICOs by the issuers,” that he “falsely claimed to be an investor and/or a technical advisor when he recommended several ICOs,” that he “encouraged investors to purchase the securities sold in certain of the ICOs without disclosing that he was simultaneously trying to sell his own holdings and had paid another third-party promoter to tout the securities” and that he “engaged in a practice known as “scalping” as to at least one digital asset security, by accumulating large amounts of the digital asset security and touting it on Twitter without disclosing his intent to sell it.”
McAfee’s co-defendant, Jimmy Gale Watson, Jr., was described as McAfee’s bodyguard. Watson is accused of assisting McAfee, naming the touting and scalping activities in particular.
“McAfee was paid bitcoin (BTC) and ether (ETH) worth more than $11.6 million, plus an additional $11.5 million worth of promoted tokens, as undisclosed compensation for his promotions of seven ICOs. McAfee paid Watson at least $316,000 for his role,” the complaint stated.
McAfee has commented on the SEC’s scrutiny of his activities in the past. He wrote on Twitter in June 2018 that “Due to SEC threats, I am no longer working with ICOs nor am I recommending them, and those doing ICOs can all look forward to arrest.”
Decrypt’s Tim Copeland published a detailed report in April 2019 about McAfee’s ICO promotions, revealing that he would seek payment in the form of up to 20 percent of a project’s token supply in exchange for his promotional support. The outlet reported at the time that “contracts shared with Decrypt show he has continued to accept money for promoting ICOs toward the end of last year.”
The SEC is seeking disgorgement of ill-gotten gains, civil penalties, and barring both McAfee and Watson “from participating, directly or indirectly, in the issuance, purchase, offer, or sale of any digital asset security.”
Read the full complaint below:
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.