The Securities and Exchange Commission (SEC) said it expects the Spanish authorities will inform John McAfee that he has been sued by the US government.
The SEC is accusing the Founder of the computer security company, McAfee for promoting seven initial coin offerings (ICOs) without disclosing that he was paid to do this. The US top agency said McAfee was contracted by ICO projects to promote the sale on his social media channels, particularly leveraging his fame on Twitter.
The antivirus software entrepreneur has been indicted for tax evasion in the US after allegedly failing to declare earnings running into millions of dollars. He was arrested by Spanish police in December while attempting to board a flight from Barcelona to Istanbul.
After McAfee’s arrest in Spain, where extradition is pending, the SEC began the process of attempting to serve him with legal documents “via the Hague Convention on October 22, 2020.”
The watchdog said it has been in touch with the Spanish authorities to inquire about the status of Hague Convention service and has recently learned that “the relevant authorities expect to be able to serve McAfee imminently.”
The SEC did not provide a timeline about his extradition from Spain, but said it will inform the court of any update to this process by April 15, or when McAfee is sent back home, whichever is sooner.
Mcafee Earned Millions from Promoting Cryptocurrencies
While he received more than $23.1 million in secret compensation for touting unlicensed tokens, the Silicon Valley legend never disclosed to the regulators that he pocketed nearly half of the funds these ICOs had raised in exchange for his promotional deals.
The SEC specifically targeted McAfee for failing to disclose that his endorsement of the projects was paid for, which is a direct circumvention of its regulations. Celebrities are not allowed to use their social media influence to tout securities without disclosing their compensation.
McAfee was paid more than $11.6 million in Bitcoin and Ethereum, plus an additional $11.5 million worth of promoted tokens for his promotions of seven ICOs that reportedly raised $41 million in the process.
Some of that alleged dishonest promotion was related to McAfee’s claims that he was merely an investor who was willing to invest his own money in the ventures. In other cases, he presented ICO information as unbiased research to create the impression that he vetted these companies, and that they were benefitting from his technical expertise. In fact, McAfee’s tweets were paid promotions disguised as impartial investment advice without disclosing that he received either cash or cryptocurrencies for his services.
Additionally, McAfee was charged with duping investors to buy the worthless tokens when he could no longer generate interest in ICOs with tweets.
Finally, the watchdog said McAfee not only lied about his own independence but also engaged in a practice known as ‘scalping’ otherwise known as selling tokens he had accumulated as soon as its price rose, usually after touting it on Twitter without disclosing his intent to sell it.
At the time, ICO operators and sometimes ‘scammers’ had been trying to capitalize on the intersection of celebs and cryptocurrency enthusiasts to grab money from investors in the hot market. The trend of celebrity endorsements even forced the SEC to release an official statement ordering the involved celebrities to disclose the nature, scope and amount of compensation received in exchange for the promotion.