McAfee, who is detained in Spain, was indicted alongside Jimmy Gale Watson Jr., an executive adviser to McAfee, according to federal officials. Watson was arrested in Texas on Thursday night.
Charges against the men were unsealed in a Manhattan federal court on Friday. Both are alleged to have used McAfee’s Twitter account to spread information on cryptocurrency investments to hundreds of thousands of followers and profit from the effort.
The cryptocurrencies the defendants are alleged to have promoted were bought up by McAfee, Watson and other members of their team ahead of time. McAfee then advertised the cryptocurrencies on social media as good investments without disclosing that he had bought large quantities, inflating their market prices.
McAfee and Watson were able to accrue more than $13 million as part of this scheme between 2017 and 2018, which also involved using McAfee’s Twitter account to advertise fundraising events for startup businesses to sell digital tokens to investors without disclosing that McAfee was being paid to advertise these events.
Both defendants were charged in a seven-count indictment that includes allegations of wire fraud and money laundering. Both McAfee and Watson face at least 50 years behind bars if convicted of all counts based on federal sentencing guidelines. The charges also come with financial penalties.
Manhattan U.S. Attorney Audrey Strauss said in a statement Friday that “as alleged, McAfee and Watson exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception.”
“Investors should be wary of social media endorsements of investment opportunities,” Strauss warned.