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John McAfee “Crypto King” Arrested and Sued for coining ICOs

Crypto King John McAfee has been detained and is currently in Spain while waiting for deportation to the United States.

The US DOJ has unsealed recently a June 15 indictment for tax evasion that alleged the cybersecurity software developer and ICO publicity man had hidden cryptocurrency and other assets in bank accounts that carry different names. When convicted, he will face up to 30 years in prison.

Right before the announcement, the SEC has filed a civil complaint in the US District Court against John McAfee, claiming that he has secretly made over $23M from promoting seven initial coin offerings.

McAfee and his lawyers are not yet available to comment.

The accusation claims that McAfee has failed to pay taxes from 2014 to 2018. Furthermore, it says that to hide the earnings, he has routed the income through cryptocurrency accounts using another individual’s name.

As for how much McAfee should pay in taxes with his cryptocurrency earnings, the SEC’s civil suit laid out the details.

The civil suit that also named the ex-Team McAfee CEO and bodyguard Jimmy Watson, also alleged that McAfee had coined eight initial coin offerings without revealing that he had been paid to do it.

Telling all the details, it was also stated that seven ICOs have risen to $41M. McAfee has received $11.6M in Bitcoin and Ether, adding $11.5M from the seven projects’ tokens.

Watson has also earned $316,000 for helping tout and “scalp” securities by quickly sell the coins after pushing them up, the SEC stated.

McAfee has been charged with violating Section 17 of the Securities Act and Section 10 of the Securities Exchange Act.

SEC stated that McAfee has lied to the investors, claiming that the projects themselves paid him. Furthermore, according to the suit:

“McAfee falsely claimed to be an investor and/or a technical advisor when he recommended several ICOs, creating the impression that he had vetted these companies, that they were benefitting from his technical expertise, and that he was willing to invest his own money in the ventures. In reality, McAfee’s tweets were paid promotions disguised as impartial investment advice.”

At one point, McAfee was brought out by the press. SEC states that they have presented a problem: He still had many now worthless coins from the ICOs. That is why McAfee has allegedly pumped the tokens:

“To cash out, McAfee 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.”

The complaint didn’t name the ICOs, which has occurred from December 2017 to early 2018. However, they gave some description:

  • ICO-1, from a group based in Romania
  • ICO-2, from a UK company operating in Nigeria
  • ICO-3, from a Belize company operating in Las Vegas
  • ICO-4, from an Atlanta company
  • ICO-5, from a San Francisco company
  • ICO-6, from a Miami company
  • ICO-7, from a Virgin Islands company operating in Moscow
  • ICO-8, from a UK company

Generally, the complaint has portrayed McAfee as a contemporary P.T. Barnum for the crypto set, leveling the then-exploding Bitcoin price to garner the personal publicity:

“McAfee’s extravagant posts (such as tweeting predictions about BTC price increases and promising to ‘eat my d**k on national television’ if such predictions did not pan out) and interviews about his BTC predictions generated an enormous amount of publicity, especially among the digital asset community.”

Subsequently, the SEC said that the token projects called, and McAfee could sell the newfound influence to the token projects. It resulted in tweets like these:

The SEC asked the court to order McAfee and Watson to “disgorge all ill-gotten gains they received as a result of the violations alleged herein and to pray prejudgment interest,” as well as the civil money penalties.

It is also seeking to permanently bar McAfee from participating with the digital asset security sales or ever serving as a director or the officer of a company that has offered the registered securities.

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