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How McAfee Has Cheated The Investors In Cryptocurrency Scheme?

How McAfee Has Cheated The Investors In Cryptocurrency Scheme?

The pioneer of technology John McAfee has been charged with the conspiracy for committing fraud and in money laundering and a deceptive scheme for promoting cryptocurrencies, as announced by federal prosecutors on Friday.

How McAfee Has Cheated The Investors In Cryptocurrency Scheme?

In this newly indictment which unsealed, the Justice Department has alleged that McAfee and the business associate of him, Jimmy Watson, have used the McAfee’s Twitter account for touting various types of cryptocurrencies. This was done to influence  the hundreds of thousands of their followers and all while concealing from their potential investors how they have stood to gain from the run-up in the prices. Prosecutors have alleged that Watson, McAfee, and some other members of the McAfee’s cryptocurrency team have taken in an amount greater than $13 million by victimizing different investors who have bought in to this fraudulent scheme.

How McAfee Has Cheated The Investors In Cryptocurrency Scheme?

McAfee was in Spain detained by the authorities after he was also arrested on other criminal tax evasion charges that was filed by the Justice Department’s tax division. Officials in the Department have said that the extradition to the U.S. is still pending. Watson and McAfee could not have been immediately reached for comment on Friday.

Prosecutors had alleged that McAfee and his close associates have exploited the popularity of their Twitter account for running what is known as a “pump and dump” scheme.

Watson and McAfee had first bought quite big quantities of the cryptocurrencies at very low prices, as per the indictment. Then, they had promoted these same digital tokens on the  Twitter, for attempting to inflate their prices. They had used misleading and false endorsements which included deceptively stating to the potential investors that they will be disclosing whether they have owned these cryptocurrencies  or not which they are recommending. But those were quite false assurances. The prosecutors claim that next came the “dump” part.

After the rates of those cryptocurrencies reached its high, McAfee and his associates had sold off their positions, quite at a significant profit,as per the indictment, leaving the investors with those assets which in the long term value had declined substantially. Prosecutors have alleged that the Watson and McAfee had engaged in this ugly “scalping” scheme that started from around December 2017 to around January 2018.

The Prosecutors have also stated that Watson and McAfee with various crimes that are related to another second such scheme that involved fundraising events which were called “initial coin offerings’. In this the start-ups have issued and sell the digital tokens to various investors. This Securities and Exchange Commission has now warned the people who promote such ICOs are required to disclose any such compensation that they would be receiving endorsing these digital tokens. Due to the alleged violation of the securities laws, Watson and  McAfee endorsed ICOs that were being concealed from investors that in reality were getting paid for those promotional tweets.

From the month of December  of 2017 to the month of February of 2018, McAfee along with his associates roughly earned  $11 million through payments which were undisclosed. These payments were made by ICO issuers which McAfee kept a secret from the investing public, as the indictment reports. Prosecutors produced as evidence images of McAfee’s tweets in the court as proof of his misrepresentations. In one tweet dated Dec. 20 of 2017, McAfee replies to a user who asks him whether he gets  monetary gains to promote an ICO. He replies in negative.  But prosecutors allege that he was telling a lie as he had been getting paid  for boosting ICO through his account on Twitter. 

Watson and McAfee were charged with 7 counts. Each count carries at least a maximum of ten  or twenty years in prison, along with financial penalties. 

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