On March 5, 2021, the U.S. Legal professional’s Workplace for the Southern District of New York charged John McAfee and his former worker, Jimmy Gale Watson, with conspiracy, fraud, and cash laundering expenses in connection together with his cryptocurrency actions—particularly McAfee’s Twitter statements touting numerous cryptocurrencies and his false and deceptive statements regarding private investments or different involvement with those self same cryptocurrencies. The U.S. Securities and Change Fee (SEC) and Commodity Futures Buying and selling Fee (CFTC) have filed civil expenses towards McAfee and his former colleague in separate parallel actions, every based mostly on a unique facet of McAfee’s alleged scheme. This case and the anticipated upcoming congressional job pressure on cryptocurrencies are doubtless to supply the market with extra readability on how cash and initiatives shall be handled in investigations, together with whether or not they are often handled as securities or commodities and the relative roles of the SEC and CFTC.
Within the McAfee case, the primary alleged a part of the scheme is a pump-and-dump. A pump-and-dump scheme usually entails a celebration or entity buying a place in a monetary instrument after which artificially inflating the worth of that instrument earlier than promoting at an inflated worth. On this case, McAfee and his crew allegedly purchased giant portions of assorted much less fashionable than Bitcoin however publicly traded cryptocurrencies, comparable to Dogecoin, Reddcoin, and Verge. McAfee, a public determine of kinds due to his anti-virus software program and social media following, then publicly endorsed and advisable a specific cryptocurrency on Twitter. When the worth of that cryptocurrency elevated, McAfee and his crew bought their investments, incomes a cumulative revenue of roughly $2 million. In accordance with the indictment, McAfee liquidated a lot of his cryptocurrency holdings by New York Inventory-Change-based corporations, implicating numerous securities legal guidelines.