Eccentric cryptocurrency prophet John McAfee, along with a company that he is associated with, is being sued over an alleged pump and dump scheme.
A Complicated Story
McAfee is one of the defendants named in a lawsuit filed by Rosen Law Firm on behalf of current and former shareholders of MGT Capital Investments, which is also listed as a defendant. The plaintiffs claim monetary losses caused by purchasing artificially priced shares.
The suit is linked to an investigation which the Securities and Exchange Commission, one of the US’ main financial regulators, initiated in September 2018. The former CEO of MGT Capital Investments, Robert Ladd, is one of the subjects of that investigation. He has left the company since.
The SEC alleges that Ladd was part of a group of ten who made approximately $27 million by selling stocks with artificially high prices. These prices were generated in part by the announcement of a deal with a “cybersecurity innovator who had created a popular antivirus software bearing his name” (almost certainly McAfee). As a result of the activities mentioned in the SEC complaint, it is alleged that the defendants made approximately $9.4 million from MGT Capital Investment shares alone in only two weeks.
Neither MGT Capital Investments nor John McAfee is specifically mentioned in the investigation, but they are in the private lawsuit, which is heavily based on the SEC complaint.
Also mentioned in the investigation was John O’Rourke, CEO of Riot Blockchain, who has since left his company, and pharmaceutical billionaire Phillip Frost.
An MGT spokesperson told CCN: “MGT has the utmost confidence that the suit filed against them is without merit. This is not a departure from normal affairs in securities markets when share prices are down. Previous cases along a similar vein were thrown out without prejudice.”
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About MGT Capital Investments
This company was originally an investment firm headed by Ladd but began mining Bitcoin in June 2016 under McAfee’s leadership. It extended its activities to Ethereum in June 2017. According to its website, its headquarters are in North Carolina, and its mining facility is in Washington. In August, the firm raised $2.4 million investment money.
John McAfee is not currently employed by the company but was executive chairman and CEO of the company until August 2017
Some Say That McAfee Likes to Pump
This is not the first time that the eccentric McAfee has been linked to pumping and dumping. In December 2017, he announced on his popular Twitter profile that he would be talking about a new coin every day. Because his endorsement had proved to have a dramatic effect on price in the past, accusations of price pumping were inevitable.
Beginning tomorrow, I will each day talk about a unique altcoin. Most of the 2,000 coins are trash or scams. I’ve read every white paper. The few I’m connected to I will tell you. The rest I have no position in. These coins will change the world. You can support
— John McAfee (@officialmcafee) December 20, 2017
Riot Blockchain was in the news in February. Originally a manufacturer of animal healthcare products called Bioptix, it purchased $2 million worth of Bitcoin mining equipment in September 2017 and re-branded, which caused its stock price to skyrocket, times being what they were. Unfortunately for that company (and at least one relatively famous person that invested in it), CNBC ran a damning investigative piece on the company’s activities, which cause its stock to crash.
It subsequently was hit with no fewer than seven class-action lawsuits by investors that claim that they purchased shares because of misleading claims.