John McAfee has a new complaint from the SEC, adding to his legal troubles. (He was also recently arrested on charges of tax evasion.) The SEC alleges that McAfee promoted initial coin offerings (ICOs) to his social media followers without disclosing that he was paid to do so. As of publishing, McAfee has one million followers on Twitter. Today, the digital assets that McAfee recommended are almost totally worthless.
McAfee allegedly received $23 million to promote certain ICOs. The SEC alleges that McAfee presented himself as an impartial source when he promoted the ICOs to his followers. The complaint states: “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.” When investors asked if he had received compensation, the SEC alleges that McAfee denied receiving any money from the issuers. In total, the SEC believes that McAfee raised a total of $41 million from investors.
The SEC included McAfee’s bodyguard, Jimmy Watson Jr., in the complaint. According to the SEC, Watson helped McAfee negotiate the promotion deals, and was paid $316,000 for his role in the scheme. The regulator alleges that Watson also had a role in a related money-making fraud. Allegedly, McAfee and Watson bought shares in the ICO and then sold McAfee’s shares as the prices rose. McAfee allegedly planned to sell his shares even as he promoted the ICOs to his followers.
McAfee is best known for inventing McAfee antivirus software in the 1980s. Media outlets describe him as a “cybersecurity entrepreneur.” In his Twitter bio, he describes himself as an “iconoclast.” The SEC has an Investor Alert devoted to celebrity endorsements, cautioning that investors should never trust celebrity-recommended security without thoroughly researching it themselves.