digital fraud

McAfee bodyguard pleads not guilty in $13M digital currency fraud case

The former bodyguard to embattled John McAfee has pleaded not guilty in a $13 million digital currency fraud case. Jimmy Gale Watson Jr. faces a seven-count indictment including conspiracy to commit securities fraud and substantive wire fraud.

McAfee hired Watson in 2017 to be his private bodyguard. The decorated former Navy Seal rose up the ranks, becoming one of the executives behind the McAfee Team, a digital currency team founded by the antivirus software innovator that purported to give investors tips and advice on the best projects to invest in.

However, as CoinGeek reported earlier this month, the team was using social media for pump and dump schemes. The U.S. Justice Department unsealed an indictment against the pair for two schemes in which they were accused of promoting junk projects and ICO projects without disclosing they were receiving payments to do this. They would also buy these tokens beforehand and once they shot up in price, they would dump them and crash their markets, investigators said.

For their pump and dump scheme, they made at least $2 million, according to the Justice Department. Their biggest revenue stream was through promoting junk ICO projects, earning them $11 million, authorities said.

As Law360 now reports, Watson has pleaded not guilty to the seven charges against him before U.S. Magistrate Judge Kevin Fox in a New York Federal court.

The DoJ charged him, and McAfee, with one count of conspiracy to commit commodities and securities fraud which carries a five-year sentence; one count of conspiracy to commit securities and touting fraud which carries a similar sentence; two counts of conspiracy to commit wire fraud and two counts of substantive wire fraud, each of which carries a 20-year sentence; and one count of conspiracy to commit money laundering which carries a maximum potential sentence of ten years in prison.

In addition, the SEC and the CFTC have filed civil charges against Watson and his former boss, who is currently in jail in Spain. McAfee was arrested on separate charges—namely, tax evasion and making false statements. Spanish authorities are working with their U.S. counterparts to extradite him to face his charges.

FBI Assistant Director William Sweeney warned anyone thinking of using digital currencies exempted them from following the law, stating, “When engaging in illegal activity, simply finding new ways to carry out old tricks won’t produce different results. Investment fraud and money laundering schemes carry a strict penalty under federal law.”

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups-from BitMEX to BinanceBitcoin.comBlockstreamShapeShiftCoinbaseRipple and 
Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

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