Antivirus tycoon John McAfee arrested in Spain for tax evasion

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John McAfee
John McAfee

Antivirus pioneer John McAfee was arrested in Spain on Monday, charged with evading tax and fraudulently touting cryptocurrency on social media. 

The computer programmer now faces extradition to the United States. 

Mr McAfee, 75, was charged by the US Department in June but the indictment was only unsealed after his arrest. It claims that despite allegedly earning millions in income from promoting cryptocurrency, consulting, speaking at events and selling his life rights to a media company, Mr McAfee failed to file tax returns between 2014 and 2018.

The indictment also alleges McAfee attempted to evade the taxman by concealing homes, a car and a yacht in the names of others.

The Securities and Exchange Commission simultaneously charged Mr McAfee with promoting investments in Initial Coin Offerings (ICOs) to his Twitter followers without disclosing that he was paid to do so. McAfee’s bodyguard Jimmy Watson Junior was also charged for his role in the alleged scheme.

According to the SEC complaint, he promoted seven unnamed ICOs on Twitter making more than $23m (£18m) in cryptocurrency from the scheme. When investors asked whether he was paid to promote the ICOs, McAfee allegedly denied receiving any compensation from the company, the complaint said. 

Investors were left holding digital assets that are now essentially worthless, it added. 

The SEC is also pursuing charges against Jimmy Gale Watson Jr, a bodyguard to McAfee, on charges he aided and abetted the sale of the digital currencies. Mr McAfee and Mr Watson also allegedly engaged in a separate scheme to profit from a digital asset security by secretly accumulating a large position in McAfee’s accounts, touting the ICO on Twitter while intending to sell it, and then selling McAfee’s holdings as the price rose.

"Potential investors in digital asset securities are entitled to know if promoters were compensated by the issuers of those securities," said Kristina Littman, Cyber Unit Chief.  "McAfee, assisted by Watson, allegedly leveraged his fame to deceptively tout numerous digital asset securities to his followers without informing investors of his role as a paid promoter." 

The SEC is looking for damages as well as disgorgement of ill-gotten gains, with interest and wants to ban him permanently from serving as an officer or director of any listed company or any company that files reports to the agency.

If convicted of all the Justice Department's charges, Mr McAfee faces 30 years in prison. 

ICOs spiked in popularity around 2016 when the buzz around Bitcoin and other cryptocurrencies hit a high. It works similarly to Initial Public Offerings, by asking people to invest in a cryptocurrency company in exchange for a token or coin but unlike the stock market are completely unregulated. Some companies offering ICOs are now worthless. 

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Mr McAfee sold the cyber security company that bears his name to Intel in 2010.  He announced a second attempt to run for president in June 2018, for the 2020 presidential election. His policies were focused on promoting the use of cryptocurrency. 

Writing on Twitter, Mr McAfee’s wife, Janice, said he was in good spirits.

“Since we left the United States, it has meant the world to both of us knowing that there are still believes in freedom all over the world.”

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