The legal saga surrounding the late antivirus tycoon John McAfee continues as his former bodyguard, Jimmy Gale Watson Jr., entered a plea of not guilty on March 24, 2021, to multiple cryptocurrency fraud charges in the U.S. District Court for the Southern District of New York.
According to court documents, Watson appeared before Magistrate Judge Kevin Fox to submit his plea. Watson, a former Navy SEAL, was arrested in Texas earlier this month and faces charges including money laundering and securities fraud. Authorities allege that McAfee and Watson collectively defrauded crypto investors of more than $13 million through a coordinated scheme.
Details of the 'Pump and Dump' Scheme
The U.S. Department of Justice (DoJ) detailed the charges in a March 5, 2021 announcement: conspiracy to commit commodities and securities fraud, conspiracy to commit securities and touting fraud, wire fraud conspiracy and substantive wire fraud, and money laundering conspiracy. These charges stem from two fraudulent promotional schemes involving cryptocurrencies classified as commodities or securities under federal law.
Watson served as an 'executive adviser' for the 'McAfee Team' website, which claimed to offer trading tips endorsed by McAfee himself. Prosecutors allege that McAfee and Watson used McAfee's personal Twitter account to artificially inflate the prices of cryptocurrencies before selling their holdings—a classic 'pump and dump' maneuver. The operation netted them millions while leaving retail investors holding depreciated assets.
McAfee Awaiting Extradition from Spain
McAfee remains incarcerated in Spain on separate tax evasion charges. The U.S. government is actively pursuing his extradition to face the full scope of allegations, including failure to file tax returns. If convicted, McAfee could face more than five years in federal prison. He also faces a separate civil lawsuit from the Commodity Futures Trading Commission (CFTC).
Notably, McAfee died in a Spanish prison on June 23, 2021, though the case against his associate Watson continues to move forward. Watson's not-guilty plea sets the stage for further litigation, which industry observers believe will test regulators' ability to police fraudulent behavior in the cryptocurrency market.