This document is a complaint filed by the Securities and Exchange Commission (SEC) against John McAfee and Jimmy Watson alleging securities law violations related to their promotion of initial coin offerings (ICOs) on Twitter. Specifically, the SEC alleges that from 2017-2018:
1) McAfee promoted at least seven ICOs on Twitter without disclosing that he was paid over $23 million by the issuers to do so. When asked, he lied about being paid for the promotions.
2) McAfee falsely claimed to be an investor in and advisor to some of the ICO projects, when in reality his tweets were paid promotions disguised as impartial advice.
3) After his paid promotions
Over several years, Akazoo defrauded investors of millions of dollars by falsely claiming to be a rapidly growing music streaming company with millions of subscribers and over $124 million in annual revenue. In reality, Akazoo had no paying users or meaningful revenue. After a short-seller report exposed the fraud, Akazoo admitted its financial statements were false and it had participated in a scheme to falsify its books. The SEC is now seeking penalties and disgorgement from Akazoo for violating securities laws through its fraudulent misrepresentations.
This document is a complaint filed by the United States Securities and Exchange Commission (SEC) alleging that John Fife and five entities he owns have been operating as unregistered securities dealers in violation of federal law. The SEC alleges that from 2015 to the present, the defendants purchased over 250 convertible promissory notes from approximately 135 penny stock issuers, converted the notes into billions of newly issued shares, and sold the shares for over $61 million in profits. The SEC is seeking to enjoin the defendants from further violations and to obtain disgorgement, penalties, and other equitable relief.
The SEC filed a complaint against Bettor Investments, LLC and its managing member Matthew Stuart for violations of federal securities laws. The complaint alleges that between 2015-2018 the defendants raised over $145,000 from investors by falsely claiming profits from sports betting when they had actually suffered significant losses. They also issued promissory notes to investors with guaranteed returns that they knew they could not pay back due to insufficient funds. The SEC is seeking to enjoin the defendants from further violations and impose civil penalties.
This memorandum discusses the tax treatment of Bitcoin in the US. It notes that the IRS issued guidance in March 2014 treating Bitcoin as property for tax purposes. This means that Bitcoin transactions are taxable in the same way as property transactions. The memo provides details on how to calculate capital gains and losses from Bitcoin use and explains the tax obligations of Bitcoin miners and those who receive Bitcoin for goods or services.
Bitcoin, Block Chain, Cryptocurrency and ICOs: A Legal Perspectiveideatoipo
Block chain, bitcoin and other cryptocurrencies, and ICOs have dominated recent headlines. While excitement continues to grow around this rapidly expanding space, there still seems to be a lot of unanswered questions. Roger Royse, founder of the Royse Law Firm, will discuss the legal issues that may determine the future of these emerging technologies.
ICOs and Venture Financing: Understanding the Issues for a new Funding StrategyMark Radcliffe
Token offerings and ICOs have gained publicity as an alternative to venture financing. However, they are increasingly being used to supplement traditional venture financing for startups who have already taken investment from angels and traditional venture investors .This "hybrid structure" raises new issues for companies and investors, particularly relating to choice of the token issuer, size of the offering and control of the token issuer. This presentation was part of a panel presentation the Global Corporate Venture Capital Summit in Monterey on February 1, 2018.
Over several years, Akazoo defrauded investors of millions of dollars by falsely claiming to be a rapidly growing music streaming company with millions of subscribers and over $124 million in annual revenue. In reality, Akazoo had no paying users or meaningful revenue. After a short-seller report exposed the fraud, Akazoo admitted its financial statements were false and it had participated in a scheme to falsify its books. The SEC is now seeking penalties and disgorgement from Akazoo for violating securities laws through its fraudulent misrepresentations.
This document is a complaint filed by the United States Securities and Exchange Commission (SEC) alleging that John Fife and five entities he owns have been operating as unregistered securities dealers in violation of federal law. The SEC alleges that from 2015 to the present, the defendants purchased over 250 convertible promissory notes from approximately 135 penny stock issuers, converted the notes into billions of newly issued shares, and sold the shares for over $61 million in profits. The SEC is seeking to enjoin the defendants from further violations and to obtain disgorgement, penalties, and other equitable relief.
The SEC filed a complaint against Bettor Investments, LLC and its managing member Matthew Stuart for violations of federal securities laws. The complaint alleges that between 2015-2018 the defendants raised over $145,000 from investors by falsely claiming profits from sports betting when they had actually suffered significant losses. They also issued promissory notes to investors with guaranteed returns that they knew they could not pay back due to insufficient funds. The SEC is seeking to enjoin the defendants from further violations and impose civil penalties.
This memorandum discusses the tax treatment of Bitcoin in the US. It notes that the IRS issued guidance in March 2014 treating Bitcoin as property for tax purposes. This means that Bitcoin transactions are taxable in the same way as property transactions. The memo provides details on how to calculate capital gains and losses from Bitcoin use and explains the tax obligations of Bitcoin miners and those who receive Bitcoin for goods or services.
Bitcoin, Block Chain, Cryptocurrency and ICOs: A Legal Perspectiveideatoipo
Block chain, bitcoin and other cryptocurrencies, and ICOs have dominated recent headlines. While excitement continues to grow around this rapidly expanding space, there still seems to be a lot of unanswered questions. Roger Royse, founder of the Royse Law Firm, will discuss the legal issues that may determine the future of these emerging technologies.
ICOs and Venture Financing: Understanding the Issues for a new Funding StrategyMark Radcliffe
Token offerings and ICOs have gained publicity as an alternative to venture financing. However, they are increasingly being used to supplement traditional venture financing for startups who have already taken investment from angels and traditional venture investors .This "hybrid structure" raises new issues for companies and investors, particularly relating to choice of the token issuer, size of the offering and control of the token issuer. This presentation was part of a panel presentation the Global Corporate Venture Capital Summit in Monterey on February 1, 2018.
United states securities_and_exchange_v_middleton_et_al__nyedce-19-04625__0001.0Hindenburg Research
SEC files emergency action to stop the founders of VERI tokens from dissipating the remaining $8 million of allegedly fraudulently raised crypto proceeds
Equitas Bio/Pharma Solutions filed a complaint against Predictive Technology Group in the United States District Court for the Southern District of New York. The complaint alleges breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud. Equitas and Predictive entered into a Master Services Agreement and several Project Work Orders whereby Equitas would provide consulting services to Predictive. However, Predictive failed to make several required payments to Equitas totaling over $300,000 and failed to cure after notice, constituting a breach of contract.
The document provides an overview of stablecoins and discusses various legal issues related to stablecoins. It summarizes the different types of stablecoins including fiat-backed, commodity-backed, crypto-backed, and algorithm-backed stablecoins. It also discusses regulations that may apply to stablecoins including securities laws, payment laws, and money transmission laws. Real-life applications of different types of stablecoins are illustrated including cases for fiat-backed, crypto-backed, and commodity-backed stablecoins. Potential risks and liabilities of stablecoin issuers are also examined.
The FBI document analyzes the virtual currency Bitcoin and assesses how criminals could use it for illicit activities. It finds that while Bitcoin does not have a central server, criminals can still target third-party Bitcoin services and individual wallets to steal funds. The FBI also assesses that criminals may treat Bitcoin like other virtual currencies for moving money, but its use for money laundering is uncertain. As Bitcoin becomes more popular and stable, it could enable more illegal activities due to its lack of centralized oversight.
Us securities and_exchange_commission_v_milton__nysdce-21-06445__0001.0Hindenburg Research
This document is a complaint filed by the United States Securities and Exchange Commission against Trevor R. Milton, the founder and former CEO of Nikola Corporation. The SEC alleges that from November 2019 to September 2020, Milton made materially false and misleading statements about Nikola's products, technology, and commercial prospects through social media and media appearances in order to inflate and maintain Nikola's stock price for his own financial benefit, in violation of securities laws. Specifically, the SEC claims Milton lied about Nikola's progress on electric and hydrogen-powered trucks, battery and fuel cell technology, and production capabilities. The SEC is seeking fines, penalties, and officer and director bars against Milton.
This document is a 2,150 word essay on cryptocurrencies and Bitcoin submitted as a second assessment for a Technology and E-Commerce Law course. It begins by discussing two recent cases where hackers demanded ransom payments in Bitcoin for stolen data and content. The essay then provides background on Bitcoin, explaining that it is a decentralized digital currency created in 2009 that exists on a peer-to-peer network and uses cryptography and a public ledger called the blockchain to record transactions. It examines debates around whether Bitcoin fulfills the criteria to be considered a currency and notes its growing acceptance among online merchants. The essay is divided into sections analyzing how Bitcoin works, its uses, challenges, and how it should be regulated in Australia.
S26: Techsauce | A New World of FinTech Regulation: What the Future Holds (23...Kullarat Phongsathaporn
The document discusses trends in financial technology (FinTech) regulation. It notes that regulators must balance financial stability, consumer protection, and innovation. New technologies are transforming finance but also present risks. The document outlines regulatory challenges from technologies like blockchain, cryptocurrencies, and cloud computing. It predicts regulators will support FinTech through sandboxes and holistic frameworks while addressing issues like cybersecurity, data privacy, and cross-border consistency.
European Payment Summit presentation delivered by Nadja van der Veer of PaymentCounsel and Michael Burtscher of Minerva on 15 March 2018.
The presentation explored current issues around the regulation of cryptocurrencies, focusing on the following topics:
Cryptocleansing: how does it work?
Market concerns & regulatory responses
The road to crytpo licensing: learning from New York
Cryptoplatforms: success through compliance
To receive a copy of this presentation by email please get in touch: hello@minervapartnership.eu
The document provides an overview of Malta's Virtual Financial Assets Act, which aims to regulate cryptocurrencies and initial coin offerings (ICOs). Some key points:
- The Act defines terms like virtual tokens, virtual financial assets, and the financial instrument test to determine the classification.
- It establishes a licensing framework for ICOs, virtual financial asset service providers, and virtual financial asset agents who will guide companies.
- ICOs must publish a whitepaper meeting extensive disclosure requirements and be registered through a licensed VFA agent.
- It outlines different classes of licenses for services like exchanges, custody, and advice and exemptions from licensing.
- Rules propose capital and insurance requirements for
Ibinex is a white label cryptocurrency exchange solution that allows any company to launch their own branded exchange. It provides a fully customizable platform with liquidity, regulatory compliance, and other features to simplify the process of starting an exchange. Ibinex operates its own interconnected network of localized exchanges to bring crypto to more markets. It aims to grow adoption by addressing barriers like complexity, difficulty of use, and lack of education. Ibinex is funding its business through an initial security token offering that represents equity in the company and will entitle investors to future dividends.
- Bitcoin Shop, Inc. is a publicly traded company that aims to build a digital currency ecosystem through its ecommerce business and partnerships with key digital currency companies.
- The company's ecommerce platform offers over 2 million products through partnerships with retailers without holding inventory.
- Rapid adoption of digital currencies and increasing merchant acceptance indicates potential for growth in the industry as more ecosystem players are needed to meet demand.
B11: Central IP & IT Court | FinTech: Legal and Regulatory Challenges (7 Aug ...Kullarat Phongsathaporn
"Special seminar on Memorial Day for Thailand's Father of Law" by Central IP & IT Court, Panelist for "FinTech: Legal and Regulatory Challenges" (7 Aug 2019)
"APAC Technology Conference" by BM APAC, Panelist for "Key challenges and opportunities facing technology businesses in Asia Pacific - Session: Innovation through M&A and Partnering" (31 July 2018)
Bitcoin, ICOs & ITOs: a legal overview | Giorgio Mazzoli | Blockchain ConfCodemotion
This presentation will be on the legal nature of bitcoin. The following aspects will be examined: bitcoin’s fundamental features, what is considered “money” from an economic and legal perspective and the difference, if any, between bitcoin and money. A specific reference shall be made to ECB’s position, to the EU Court of Justice judgment in case C-264/2014 and to EU Parliament’s resolution of April 19th, 2018.
Moreover, I will explain the effects of bitcoin’s definition as a “mean of payment on a voluntary basis” and the differences between bitcoin and fiat money with a legal tender.
B12: AMLO | FinTech Situation in Thailand and Offshore and Money Laundering R...Kullarat Phongsathaporn
This document discusses various FinTech trends and their associated anti-money laundering and counter-terrorism financing (AML/CFT) risks and challenges. It outlines the development of the FinTech ecosystem including areas like digital banking, peer-to-peer lending, cryptocurrencies, and alternative fundraising methods. It then analyzes the overall ML/FT risks of FinTech relating to issues like fraud, challenges with digital identity verification, new entrants to the industry, cross-border operations, and collaboration projects. Specific risks involving virtual assets, financial inclusion through FinTech, and digital identity/know-your-customer trends are also examined. Finally, the document discusses ways that technology can enhance AML/CFT compliance and
B17: U.S. Chamber of Commerce, the Thai Chamber of Commerce, and AmCham Thail...Kullarat Phongsathaporn
"The New Digital Economy: Creating Thailand-U.S. Commercial Opportunities Conference" by U.S. Chamber of Commerce, the Thai Chamber of Commerce, and AmCham Thailand, Panelist for "Blockchain - Implications for Thailand and Other Emerging Markets " (24 Sep 2018)
1. The SEC filed a complaint against Ivars Auzins for orchestrating two fraudulent investment schemes, Denaro and Innovamine, which raised over $18 million from investors through misrepresentations.
2. For both schemes, Auzins used fake identities and addresses to register companies and create fraudulent online profiles using stock photos to market the schemes. He falsely claimed the companies had developed capabilities that did not exist.
3. Investors were told their funds would be invested, but Auzins misappropriated nearly all of the money raised for his personal use. The SEC is seeking penalties, repayment of funds, and to restrict Auzins from further involvement in securities offerings.
The CFTC has filed a complaint against MXBK Group S.A. de C.V. and its forex trading division MBFX S.A. for violations of the Commodity Exchange Act. The complaint alleges that from 2005-present, the defendants accepted over $28 million from over 800 US customers, including some in Utah, to trade forex in pooled accounts but incurred losses of over $29 million. It also claims that on multiple occasions from June 2008-April 2009, the defendants reported fictional trading profits to customers when they had actually incurred losses, and provided false explanations for losses incurred in November 2008. The CFTC is seeking to enjoin the unlawful acts, obtain restitution, dis
United states securities_and_exchange_v_middleton_et_al__nyedce-19-04625__0001.0Hindenburg Research
SEC files emergency action to stop the founders of VERI tokens from dissipating the remaining $8 million of allegedly fraudulently raised crypto proceeds
Equitas Bio/Pharma Solutions filed a complaint against Predictive Technology Group in the United States District Court for the Southern District of New York. The complaint alleges breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud. Equitas and Predictive entered into a Master Services Agreement and several Project Work Orders whereby Equitas would provide consulting services to Predictive. However, Predictive failed to make several required payments to Equitas totaling over $300,000 and failed to cure after notice, constituting a breach of contract.
The document provides an overview of stablecoins and discusses various legal issues related to stablecoins. It summarizes the different types of stablecoins including fiat-backed, commodity-backed, crypto-backed, and algorithm-backed stablecoins. It also discusses regulations that may apply to stablecoins including securities laws, payment laws, and money transmission laws. Real-life applications of different types of stablecoins are illustrated including cases for fiat-backed, crypto-backed, and commodity-backed stablecoins. Potential risks and liabilities of stablecoin issuers are also examined.
The FBI document analyzes the virtual currency Bitcoin and assesses how criminals could use it for illicit activities. It finds that while Bitcoin does not have a central server, criminals can still target third-party Bitcoin services and individual wallets to steal funds. The FBI also assesses that criminals may treat Bitcoin like other virtual currencies for moving money, but its use for money laundering is uncertain. As Bitcoin becomes more popular and stable, it could enable more illegal activities due to its lack of centralized oversight.
Us securities and_exchange_commission_v_milton__nysdce-21-06445__0001.0Hindenburg Research
This document is a complaint filed by the United States Securities and Exchange Commission against Trevor R. Milton, the founder and former CEO of Nikola Corporation. The SEC alleges that from November 2019 to September 2020, Milton made materially false and misleading statements about Nikola's products, technology, and commercial prospects through social media and media appearances in order to inflate and maintain Nikola's stock price for his own financial benefit, in violation of securities laws. Specifically, the SEC claims Milton lied about Nikola's progress on electric and hydrogen-powered trucks, battery and fuel cell technology, and production capabilities. The SEC is seeking fines, penalties, and officer and director bars against Milton.
This document is a 2,150 word essay on cryptocurrencies and Bitcoin submitted as a second assessment for a Technology and E-Commerce Law course. It begins by discussing two recent cases where hackers demanded ransom payments in Bitcoin for stolen data and content. The essay then provides background on Bitcoin, explaining that it is a decentralized digital currency created in 2009 that exists on a peer-to-peer network and uses cryptography and a public ledger called the blockchain to record transactions. It examines debates around whether Bitcoin fulfills the criteria to be considered a currency and notes its growing acceptance among online merchants. The essay is divided into sections analyzing how Bitcoin works, its uses, challenges, and how it should be regulated in Australia.
S26: Techsauce | A New World of FinTech Regulation: What the Future Holds (23...Kullarat Phongsathaporn
The document discusses trends in financial technology (FinTech) regulation. It notes that regulators must balance financial stability, consumer protection, and innovation. New technologies are transforming finance but also present risks. The document outlines regulatory challenges from technologies like blockchain, cryptocurrencies, and cloud computing. It predicts regulators will support FinTech through sandboxes and holistic frameworks while addressing issues like cybersecurity, data privacy, and cross-border consistency.
European Payment Summit presentation delivered by Nadja van der Veer of PaymentCounsel and Michael Burtscher of Minerva on 15 March 2018.
The presentation explored current issues around the regulation of cryptocurrencies, focusing on the following topics:
Cryptocleansing: how does it work?
Market concerns & regulatory responses
The road to crytpo licensing: learning from New York
Cryptoplatforms: success through compliance
To receive a copy of this presentation by email please get in touch: hello@minervapartnership.eu
The document provides an overview of Malta's Virtual Financial Assets Act, which aims to regulate cryptocurrencies and initial coin offerings (ICOs). Some key points:
- The Act defines terms like virtual tokens, virtual financial assets, and the financial instrument test to determine the classification.
- It establishes a licensing framework for ICOs, virtual financial asset service providers, and virtual financial asset agents who will guide companies.
- ICOs must publish a whitepaper meeting extensive disclosure requirements and be registered through a licensed VFA agent.
- It outlines different classes of licenses for services like exchanges, custody, and advice and exemptions from licensing.
- Rules propose capital and insurance requirements for
Ibinex is a white label cryptocurrency exchange solution that allows any company to launch their own branded exchange. It provides a fully customizable platform with liquidity, regulatory compliance, and other features to simplify the process of starting an exchange. Ibinex operates its own interconnected network of localized exchanges to bring crypto to more markets. It aims to grow adoption by addressing barriers like complexity, difficulty of use, and lack of education. Ibinex is funding its business through an initial security token offering that represents equity in the company and will entitle investors to future dividends.
- Bitcoin Shop, Inc. is a publicly traded company that aims to build a digital currency ecosystem through its ecommerce business and partnerships with key digital currency companies.
- The company's ecommerce platform offers over 2 million products through partnerships with retailers without holding inventory.
- Rapid adoption of digital currencies and increasing merchant acceptance indicates potential for growth in the industry as more ecosystem players are needed to meet demand.
B11: Central IP & IT Court | FinTech: Legal and Regulatory Challenges (7 Aug ...Kullarat Phongsathaporn
"Special seminar on Memorial Day for Thailand's Father of Law" by Central IP & IT Court, Panelist for "FinTech: Legal and Regulatory Challenges" (7 Aug 2019)
"APAC Technology Conference" by BM APAC, Panelist for "Key challenges and opportunities facing technology businesses in Asia Pacific - Session: Innovation through M&A and Partnering" (31 July 2018)
Bitcoin, ICOs & ITOs: a legal overview | Giorgio Mazzoli | Blockchain ConfCodemotion
This presentation will be on the legal nature of bitcoin. The following aspects will be examined: bitcoin’s fundamental features, what is considered “money” from an economic and legal perspective and the difference, if any, between bitcoin and money. A specific reference shall be made to ECB’s position, to the EU Court of Justice judgment in case C-264/2014 and to EU Parliament’s resolution of April 19th, 2018.
Moreover, I will explain the effects of bitcoin’s definition as a “mean of payment on a voluntary basis” and the differences between bitcoin and fiat money with a legal tender.
B12: AMLO | FinTech Situation in Thailand and Offshore and Money Laundering R...Kullarat Phongsathaporn
This document discusses various FinTech trends and their associated anti-money laundering and counter-terrorism financing (AML/CFT) risks and challenges. It outlines the development of the FinTech ecosystem including areas like digital banking, peer-to-peer lending, cryptocurrencies, and alternative fundraising methods. It then analyzes the overall ML/FT risks of FinTech relating to issues like fraud, challenges with digital identity verification, new entrants to the industry, cross-border operations, and collaboration projects. Specific risks involving virtual assets, financial inclusion through FinTech, and digital identity/know-your-customer trends are also examined. Finally, the document discusses ways that technology can enhance AML/CFT compliance and
B17: U.S. Chamber of Commerce, the Thai Chamber of Commerce, and AmCham Thail...Kullarat Phongsathaporn
"The New Digital Economy: Creating Thailand-U.S. Commercial Opportunities Conference" by U.S. Chamber of Commerce, the Thai Chamber of Commerce, and AmCham Thailand, Panelist for "Blockchain - Implications for Thailand and Other Emerging Markets " (24 Sep 2018)
1. The SEC filed a complaint against Ivars Auzins for orchestrating two fraudulent investment schemes, Denaro and Innovamine, which raised over $18 million from investors through misrepresentations.
2. For both schemes, Auzins used fake identities and addresses to register companies and create fraudulent online profiles using stock photos to market the schemes. He falsely claimed the companies had developed capabilities that did not exist.
3. Investors were told their funds would be invested, but Auzins misappropriated nearly all of the money raised for his personal use. The SEC is seeking penalties, repayment of funds, and to restrict Auzins from further involvement in securities offerings.
The CFTC has filed a complaint against MXBK Group S.A. de C.V. and its forex trading division MBFX S.A. for violations of the Commodity Exchange Act. The complaint alleges that from 2005-present, the defendants accepted over $28 million from over 800 US customers, including some in Utah, to trade forex in pooled accounts but incurred losses of over $29 million. It also claims that on multiple occasions from June 2008-April 2009, the defendants reported fictional trading profits to customers when they had actually incurred losses, and provided false explanations for losses incurred in November 2008. The CFTC is seeking to enjoin the unlawful acts, obtain restitution, dis
Acusação da SEC para a Pirâmide Financeira Wings NetworkGonçalo Silva
This document is a complaint filed by the Securities and Exchange Commission against Tropikgadget FZE, Tropikgadget Unipessoal LDA, and 15 individuals. The SEC alleges that the defendants operated a fraudulent Ponzi and pyramid scheme through a multi-level marketing company called Wings Network. While representing that Wings Network sold digital and mobile products, the SEC claims it primarily used money from new investors to pay earlier investors with little revenue from actual product sales. The SEC is seeking emergency relief including asset freezes and injunctions to halt the alleged ongoing violations and preserve assets for defrauded investors.
This document is a class action complaint filed against Dynamic Ledger Solutions, Inc., Tezos Stiftung, Kathleen Breitman, and Arthur Breitman for violating federal securities laws by conducting an unregistered securities offering of Tezos tokens. The complaint alleges that the defendants raised over $232 million worth of bitcoin and ethereum from investors in 2017 without registering the offering with the SEC, and that the contributed funds have since increased in value to over $600 million. The plaintiffs seek rescission of the transactions and recovery of their investments plus appreciation in value.
This document is a motion filed with the United States Bankruptcy Court for the Southern District of New York by Atari, Inc. and its affiliates seeking authorization to pay certain prepetition claims of critical vendors, including game developers and one game licensor, that are essential to the debtors' ongoing operations. Specifically, the debtors request authority to pay $233,300 in claims owed to four foreign or small game development companies for work on games that are major revenue sources, as well as to maintain an important licensing agreement for the RollerCoaster Tycoon franchise. The motion argues that nonpayment of these claims could cause irreparable harm to the debtors' business operations and value.
MasterSnacks Cryptocurrency: Legal Issues in Cryptocurrency and BlockchainCitrin Cooperman
If your business is involved in cryptocurrency or Blockchain, it is in your best interest to understand the legal implications that may come along with transacting in digital assets. In this session, Jeff Neuburger, partner at Proskauer Rose and head of its Blockchain Practice, to covered the following topics and more:
- Categorization of cryptocurrencies as securities and resulting implications
- Types of licenses necessary to be involved in a cryptocurrency business
- Non-fungible tokens and associated legal issues
- Smart contracts
Riot Blockchain, Inc. changed its name and business focus in October 2017 to become a strategic investor and operator in the blockchain ecosystem. A class action lawsuit was filed alleging that during this period, Riot lacked a meaningful business plan for its cryptocurrency business and misled investors by capitalizing on public interest in cryptocurrencies to artificially inflate its stock price. When a report revealed Riot had minimal cryptocurrency investments and numerous issues in its SEC filings, Riot's stock price dropped significantly, damaging investors.
This document discusses current issues in US film financing, specifically crowdfunding and regulatory frameworks. It summarizes crowdfunding platforms like Kickstarter and Indiegogo, noting their success rates and statistics. It then outlines the JOBS Act which aims to ease securities regulations and allow for crowdfunding of securities. Specifically, it discusses Titles II-IV which permit raising capital from accredited investors online, allow small offerings to retail investors with limits, and increase Regulation A offering amounts. It closes by discussing the definition of "brokers" under securities laws and activities that could classify individuals using finders as unregistered brokers.
Part I. Business & Legal Aspects
ICO (Initial Coin Offering) Fundraising Status
SEC ICO Regulation Status
How to Avoid or Comply SEC ICO Regulation
Each State Regulation
US Regulator’s View on ICO & Exchange
STO (Security Token Offering) Introduction
STO Use Cases
STO Use Cases Directory
SEC STO Fund Raising Compliance
STO Fund Raising Compliance in Korea
Launching A STO
How Korean Company can do STO in the US?
Part II. Technical Aspects
STO Infrastructure/Services
STO Services Directory
STO Technical Solutions I
STO Technical Solutions II
STO Technical Solutions III
STO Technical Solutions IV
STO Technical Solutions V
STO Technical Solutions VI
This class action lawsuit alleges that Forex Capital Markets (FXCM) engaged in fraudulent and deceptive practices that systematically depleted customers' trading accounts. The complaint alleges that FXCM used aggressive marketing to attract unsuspecting retail traders but manipulated prices and prevented customers from closing profitable trades, allowing FXCM to profit instead. The lawsuit seeks monetary and injunctive relief on behalf of customers nationwide for violations of RICO, state consumer protection laws, and breach of contract.
This document is a complaint filed by the Securities and Exchange Commission (SEC) against Chalala Academy LLC, Lendvesting Academy Corp., and Alexandra Robert for violations of federal securities laws related to an alleged fraudulent investment scheme. The SEC alleges that from May 2020 to August 2021, the defendants raised approximately $900,000 from around 80 investors, mostly members of the Haitian and Haitian-American community in South Florida, by falsely promising guaranteed high returns of up to 48% through unregistered investment programs. The SEC claims the defendants misrepresented key facts to investors and misappropriated around $200,000 of investor funds, using other funds to make "Ponzi-like" distributions. The SEC is
This document is a complaint filed by the U.S. Commodity Futures Trading Commission against Anthony Eugene Linton alleging fraud related to his operation of an off-exchange foreign currency trading pool called The Private Trading Pool (PTP). The complaint alleges that from 2007-present, Linton solicited over $650,000 from at least 19 individuals for PTP by falsely claiming the pool would generate guaranteed 100% annual returns from forex trading using his proprietary system. In reality, Linton lost over 91% of funds from limited forex trading and instead used most money for personal expenses and to pay earlier investors like a Ponzi scheme. The CFTC alleges Linton's actions violated the Commodity Exchange Act
This document is a complaint filed by the Securities and Exchange Commission against Andrew DeFrancesco, Marlio Mauricio Diaz Cardona, Carlos Felipe Rezk, Nikola Faukovic, and Catherine DeFrancesco alleging securities fraud related to Cool Holdings, Inc. (Cool). The complaint alleges that from March 2018 to June 2019, the defendants orchestrated a fraudulent scheme through false and misleading statements in Cool's SEC filings and promotional articles to artificially inflate Cool's stock price. It further alleges that DeFrancesco then sold over 1.6 million Cool shares through nominee entities for proceeds of over $8 million while in possession of nonpublic information. The SEC is seeking fines, disgorgement
- Bitcoin Shop is an early entrant in the growing digital currency industry and one of the first publicly traded US companies in the space.
- The presentation provides an overview of the digital currency and blockchain industry, highlighting significant growth in key metrics like user wallets and transaction volume.
- Bitcoin Shop aims to build an ecosystem leveraging its ecommerce business and partnerships with various digital currency technology providers.
The Federal Trade Commission and state agencies in New Jersey filed a complaint against VIZIO, Inc. and VIZIO Inscape Services, LLC alleging the following:
1) Since 2014, VIZIO televisions have continuously tracked what consumers watch and transmitted this data to VIZIO through proprietary software without obtaining consumers' consent.
2) VIZIO earns revenue by licensing consumers' viewing data to third parties for audience measurement, advertising analysis, and targeted advertising purposes.
3) Consumers were not adequately notified about the collection and use of their viewing data. A brief on-screen notice failed to obtain meaningful consent from consumers.
This document is a complaint filed by the Securities and Exchange Commission (SEC) against Sung Kook Hwang, Patrick Halligan, William Tomita, Scott Becker, and Archegos Capital Management in the United States District Court for the Southern District of New York. The SEC alleges that from September 2020 through March 2021, the defendants engaged in a fraudulent scheme involving market manipulation and misleading counterparty firms in order to artificially inflate the stock prices of Archegos' top holdings and obtain increased trading capacity. This resulted in Archegos' positions and risk exposure growing rapidly from $4 billion to over $36 billion, until its positions collapsed in March 2021 causing billions in losses. The SEC is seeking to permanently en
ICOs as a Funding Mechanism for Blockchain Startups: The Current State of PlayParsons Behle & Latimer
This document provides an overview of initial coin offerings (ICOs) and blockchain technology. It defines key terms like blockchain, ICOs, and the different types of tokens offered. It discusses regulatory uncertainties around ICOs and recent SEC enforcement actions. The conclusion emphasizes that the SEC views most tokens as securities and will analyze the economic substance over the form to determine if a token is a security.
The U.S. Securities and Exchange Commission filed an emergency action against BroCo Investments, Inc. and its president Valery Maltsev alleging an ongoing fraud. The complaint alleges that from August 2009 to present, the defendants hijacked online brokerage accounts, placed unauthorized trades in the same securities they had acquired in their own account minutes prior to artificially affect prices, and realized over $255,000 in profits. The unauthorized trades also resulted in at least $603,000 in losses to other online brokerages and harmed unknowing market participants. The SEC seeks to freeze the defendants' assets and impose penalties, restitution, and permanent injunctions against future violations.
Living in the Wild Wild West of Fintechdouglaslyon
The document provides an overview of recent developments in fintech and crowdfunding. It discusses the different types of crowdfunding enabled by the JOBS Act of 2012, including Title II offerings to accredited investors using general solicitation, Title III crowdfunding allowing offerings to non-accredited investors, and Regulation A+ expanding exemptions. It also covers the growth of cryptocurrency and initial coin offerings, noting concerns about their environmental impact and lack of tangible value.
This SEC complaint alleges that Stephen Burns, former CEO of electric vehicle company Lordstown Motors, made negligent and materially inaccurate statements about pre-orders for Lordstown's pickup truck. Specifically, Lordstown claimed to have over 27,000 pre-orders from commercial fleets based on non-binding letters of intent, but the company had no effective processes for vetting customers or tracking pre-orders. The SEC alleges Burns' statements about pre-orders created an unrealistic depiction of demand in violation of securities laws.
The document is a letter from Nathan Anderson to the Board of Directors, Executives and Auditors of Tingo Group Inc. listing 38 questions regarding Tingo Group's business operations and financials. The questions raise serious doubts about the legitimacy of Tingo's reported revenues, customer and supplier relationships, licenses and permits. Key issues highlighted include a lack of evidence for Tingo's claimed cash balances, inventory, export volumes and mobile network operations.
1) Osirius Group LLC filed a complaint against Ideanomics Inc. in the United States District Court for the Eastern District of Michigan. Osirius provided engineering services to Via Motors from July 2022 to December 2022, invoicing Via Motors monthly. Via Motors failed to pay the invoices, owing Osirius over $2 million.
2) Ideanomics acquired Via Motors in January 2023 and had previously agreed to pay any remaining debt owed by Via Motors to Osirius. However, Ideanomics failed to pay the outstanding amount owed for Osirius' services.
3) Osirius is suing Ideanomics for breach of contract and
This 6-page legal document outlines the charges in a criminal case. It describes the defendant and their alleged crimes, which include wire fraud and aggravated identity theft. Further details are provided about the scheme, the victims impacted, and evidence collected. If convicted on all counts, the defendant faces a maximum penalty of 32 years in prison and $1 million in fines.
1) Acuitas Capital invested $20 million in Ideanomics in exchange for preferred stock and warrants that were convertible into Ideanomics common stock. However, Ideanomics has now refused to honor Acuitas Capital's requests to convert these securities, in breach of their agreement.
2) Ideanomics claims the investment agreement is "null and void" due to unrelated allegations against the CEO of Acuitas Capital, but these allegations do not excuse Ideanomics' contractual obligations.
3) Prompt relief is needed because Ideanomics has admitted it may not be able to continue as a going concern. Unless ordered to honor the conversion requests, the value of Acuitas Capital's remaining
This document outlines the terms and conditions of a private offering of $750 million in senior secured notes issued by Adani Green Energy Limited. The notes will pay 4.375% annual interest and mature in 2024. The notes are being offered only to qualified institutional buyers in the US and offshore purchasers in reliance on exemptions from securities registration laws. The notes will be listed on the Singapore Exchange and India INX and secured by certain assets of the issuer described in security documents. The proceeds are subject to restrictions on use and transfer.
This document is an annual return form for a private company limited by shares called Milestone Tradelinks Private Limited. It provides details about the company's registration, activities, shareholding, directors and key managerial personnel, meetings, and attendance of directors. Some key details include the company's registered office in Ahmedabad, its main business activity of wholesale trading, total paid up capital of Rs. 407,000, and that directors Rajesh Rameshchandra Vora and Manish Amrutlal Shah each hold 0 shares as of the financial year end.
The auditor's report provides an unmodified opinion on the financial statements of Pmc Projects (India) Private Limited for the period 01/04/2013 to 31/03/2014. The auditor found that the company has maintained proper records of fixed assets, inventories and loans. Internal control procedures for purchase, sale and fixed assets were adequate. The company has not accepted any deposits from the public. Statutory dues have generally been regularly paid, with no material disputed amounts. No frauds were reported during the period.
Chang Chien-Ting holds significant beneficial ownership in PMC Projects (India) Pvt. Ltd. through PMC Infra Limited, a company registered in Mauritius. Chang holds 100% of PMC Infra Limited and exercises his significant beneficial interest in PMC Projects (India) Pvt. Ltd. by virtue of shares held in PMC Infra Limited. He declares this significant beneficial ownership in PMC Projects (India) Pvt. Ltd. as required by Section 90(1) of the Companies Act of India. The declaration provides details of Chang such as his address, date of birth, occupation, and nationality. It specifies the nature of his indirect holding in PMC Projects (India) Pvt.
Adani Developers (later renamed Sunbourne) 2013 Annual Report.pdfHindenburg Research
The document is an auditor's report for Adani Developers Private Limited for the period of April 1, 2011 to March 31, 2012. The auditor gave an unqualified opinion and did not note any qualifications, reservations or adverse remarks. Specifically, the auditor stated that the company maintained proper records of fixed assets, conducted physical verification of inventories, and complied with statutory dues payments. The auditor also confirmed the company had an adequate internal control and internal audit system.
This document contains a list of orders from the Securities Appellate Tribunal (SAT) and adjudication orders from the Securities and Exchange Board of India (SEBI) related to various Adani group companies, primarily Adani Exports Limited. The orders range from 2008 to 2019 and include matters related to stock market manipulation and insider trading involving several individuals and brokerage firms.
Vinod Adani - The Man Behind The Adani Group’s Offshore Deals (Morning Contex...Hindenburg Research
Vinod Adani is the elder brother of Gautam Adani, Asia's second richest man. Vinod oversees many of the Adani group's offshore deals and structures through companies based in tax havens like Mauritius and Cyprus. He has been involved in major deals like the Ambuja Cements acquisition and Total's investment in Adani Green Energy. However, the Adani group has previously denied Vinod's involvement. Vinod uses complex offshore structures that allow deals to be carried out without following all Indian laws, potentially reducing taxes. There are also ongoing legal issues regarding accusations of money laundering through Vinod's offshore companies that supplied equipment to Adani Power projects in India.
Krunal Trade & Investment Pvt Ltd is a private limited company incorporated in Mauritius on October 4, 2005 as a global business company. The company's registered office is located at Trustlink House in Floreal, Mauritius. The current directors are Adani Vinod Shantilal, Caillou Louis Ricardo, Mittra Subir, and Ramsagur Shailend. Trustlink International Limited serves as the company secretary.
Gardenia Trade and Investment Ltd is a private limited company incorporated on February 2nd, 2021. It operates as a global business company with its registered office in Mauritius. The company has three directors: Agowun Nihad Mohammad Akram, Mittra Subir, and Toorabally Shakill Ahmad. Amicorp (Mauritius) Limited serves as the company's management and secretarial services provider.
Birch Trade and Investment Ltd is a private limited company incorporated in Mauritius on October 19, 2021 as a global business company. The company has three directors: Agowun Nihad Mohammad Akram, Mittra Subir, and Toorabally Shakill Ahmad. Amicorp (Mauritius) Limited serves as the company's management company and secretary.
Athena Trade and Investments Pvt Ltd is a private limited company incorporated in Mauritius on July 18, 2017 for global business. The company has three directors: Mittra Subir from Dubai, Seewooruttun Indranathsingh from Mauritius, and Toorabally Shakill Ahmad from Mauritius. Amicorp (Mauritius) Limited serves as the company's management and secretarial services provider.
Flourishing Trade and Investment Ltd is a private limited global business company incorporated on August 18, 2017 in Mauritius. The company has three directors - Mittra Subir, Seewooruttun Indranathsingh, and Toorabally Shakill Ahmad. Amicorp (Mauritius) Limited serves as the company's management and secretary.
Delphinium Trade and Investment Ltd is a private limited company incorporated on February 2nd, 2021 in Mauritius for global business purposes. The company has three directors: Mittra Subir, Seewooruttun Indranathsingh, and Toorabally Shakill Ahmad. Amicorp (Mauritius) Limited serves as the company's management company and secretary.
Dome Trade and Investment Ltd is a private limited company incorporated in Mauritius on August 18, 2017 as a global business company. It has 4 directors: Adani Vinod Shantilal, Agowun Nihad Mohammad Akram, Mittra Subir, and Toorabally Shakill Ahmad. Amicorp (Mauritius) Limited serves as the company's management company and secretary, located at Level 6, Tower 1, NeXteracom Building in Ebene, Mauritius.
Endeavour Trade and Investment Ltd was incorporated on April 29, 2021 as a private limited company in Mauritius for global business. The company has 3 directors - Mittra Subir, Seewooruttun Indranathsingh, and Toorabally Shakill Ahmad. Amicorp (Mauritius) Limited serves as the management company and secretary since the company's incorporation.
The Most Inspiring Entrepreneurs to Follow in 2024.pdfthesiliconleaders
In a world where the potential of youth innovation remains vastly untouched, there emerges a guiding light in the form of Norm Goldstein, the Founder and CEO of EduNetwork Partners. His dedication to this cause has earned him recognition as a Congressional Leadership Award recipient.
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....Lacey Max
“After being the most listed dog breed in the United States for 31
years in a row, the Labrador Retriever has dropped to second place
in the American Kennel Club's annual survey of the country's most
popular canines. The French Bulldog is the new top dog in the
United States as of 2022. The stylish puppy has ascended the
rankings in rapid time despite having health concerns and limited
color choices.”
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART
AI Transformation Playbook: Thinking AI-First for Your BusinessArijit Dutta
I dive into how businesses can stay competitive by integrating AI into their core processes. From identifying the right approach to building collaborative teams and recognizing common pitfalls, this guide has got you covered. AI transformation is a journey, and this playbook is here to help you navigate it successfully.
Profiles of Iconic Fashion Personalities.pdfTTop Threads
The fashion industry is dynamic and ever-changing, continuously sculpted by trailblazing visionaries who challenge norms and redefine beauty. This document delves into the profiles of some of the most iconic fashion personalities whose impact has left a lasting impression on the industry. From timeless designers to modern-day influencers, each individual has uniquely woven their thread into the rich fabric of fashion history, contributing to its ongoing evolution.
Call8328958814 satta matka Kalyan result satta guessing➑➌➋➑➒➎➑➑➊➍
Satta Matka Kalyan Main Mumbai Fastest Results
Satta Matka ❋ Sattamatka ❋ New Mumbai Ratan Satta Matka ❋ Fast Matka ❋ Milan Market ❋ Kalyan Matka Results ❋ Satta Game ❋ Matka Game ❋ Satta Matka ❋ Kalyan Satta Matka ❋ Mumbai Main ❋ Online Matka Results ❋ Satta Matka Tips ❋ Milan Chart ❋ Satta Matka Boss❋ New Star Day ❋ Satta King ❋ Live Satta Matka Results ❋ Satta Matka Company ❋ Indian Matka ❋ Satta Matka 143❋ Kalyan Night Matka..
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART
Satta matka fixx jodi panna all market dpboss matka guessing fixx panna jodi kalyan and all market game liss cover now 420 matka office mumbai maharashtra india fixx jodi panna
Call me 9040963354
WhatsApp 9040963354
Storytelling is an incredibly valuable tool to share data and information. To get the most impact from stories there are a number of key ingredients. These are based on science and human nature. Using these elements in a story you can deliver information impactfully, ensure action and drive change.
Ellen Burstyn: From Detroit Dreamer to Hollywood Legend | CIO Women MagazineCIOWomenMagazine
In this article, we will dive into the extraordinary life of Ellen Burstyn, where the curtains rise on a story that's far more attractive than any script.
During the budget session of 2024-25, the finance minister, Nirmala Sitharaman, introduced the “solar Rooftop scheme,” also known as “PM Surya Ghar Muft Bijli Yojana.” It is a subsidy offered to those who wish to put up solar panels in their homes using domestic power systems. Additionally, adopting photovoltaic technology at home allows you to lower your monthly electricity expenses. Today in this blog we will talk all about what is the PM Surya Ghar Muft Bijli Yojana. How does it work? Who is eligible for this yojana and all the other things related to this scheme?
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Final ank Satta Matka Dpbos Final ank Satta Matta Matka 143 Kalyan Matka Guessing Final Matka Final ank Today Matka 420 Satta Batta Satta 143 Kalyan Chart Main Bazar Chart vip Matka Guessing Dpboss 143 Guessing Kalyan night
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Fin...
SEC vs. McAfee
1. RICHARD BEST
REGIONAL DIRECTOR
A. Kristina Littman
John O. Enright
Jorge G. Tenreiro
David H. Tutor
Jon A. Daniels
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
Brookfield Place
200 Vesey Street, Suite 400
New York, New York 10281-1022
(212) 336-9145 (Tenreiro)
Email: TenreiroJ@sec.gov
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
-against-
JOHN DAVID MCAFEE and
JIMMY GALE WATSON, JR.,
Defendants.
COMPLAINT
20 Civ. 8281
ECF CASE
JURY TRIAL REQUESTED
Plaintiff Securities and Exchange Commission (“SEC” or “Commission”), for its Complaint
against Defendants John David McAfee (“McAfee”) and Jimmy Gale Watson, Jr. (“Watson”)
(collectively, “Defendants”), alleges as follows:
SUMMARY
1. McAfee is a businessman and computer programmer with hundreds of thousands of
Twitter followers. From at least November 2017 through February 2018, McAfee leveraged his fame
to make more than $23.1 million U.S. Dollars (“USD”) in undisclosed compensation by
recommending at least seven “initial coin offerings” or ICOs to his Twitter followers. The ICOs at
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 1 of 55
2. 2
issue involved the offer and sale of digital asset securities and McAfee’s recommendations were
materially false and misleading for several reasons.
2. First, McAfee did not disclose that he was being paid to promote the ICOs by the
issuers (the companies selling the securities in the ICOs). Promoting a security without disclosing
that you are being paid to do so is unlawful “touting” and violates the federal securities laws. The
ICOs McAfee touted raised at least approximately $41 million and McAfee made approximately
$23.2 million in secret compensation for his touts. When directly asked if he was being paid for
these promotions, McAfee lied to investors by falsely denying he was being paid by the issuers.
3. Second, McAfee falsely claimed to be an investor and/or a technical advisor when he
recommended several ICOs, creating the impression that he had vetted these companies, that they
were benefitting from his technical expertise, and that he was willing to invest his own money in the
ventures. In reality, McAfee’s tweets were paid promotions disguised as impartial investment advice.
4. Third, after a blogger exposed McAfee’s paid promotions and he could no longer
generate interest in ICOs with tweets, McAfee was still holding a large number of virtually worthless
securities from the ICOs he had previously touted. To cash out, McAfee encouraged investors to
purchase the securities sold in certain of the ICOs without disclosing that he was simultaneously
trying to sell his own holdings and had paid another third-party promoter to tout the securities.
5. Finally, McAfee engaged in a practice known as “scalping” as to at least one digital
asset security, by accumulating large amounts of the digital asset security and touting it on Twitter
without disclosing his intent to sell it. Scalping generally allows promoters to sell their securities
holdings quickly and profitably through market interest that they deceptively generate, and violates
the federal securities laws.
6. Defendant Watson was McAfee’s bodyguard; he also substantially assisted McAfee’s
touting and scalping schemes. Among other things, Watson negotiated the deals with ICO issuers
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 2 of 55
3. 3
seeking promotions, helped McAfee monetize the proceeds of his promotions, and directed his
then-wife to tweet fake interest in an ICO that McAfee was promoting at the behest of the issuer.
7. McAfee was paid bitcoin (BTC) and ether (ETH) worth more than $11.6 million,
plus an additional $11.5 million worth of promoted tokens, as undisclosed compensation for his
promotions of seven ICOs. McAfee paid Watson at least $316,000 for his role.
VIOLATIONS
8. By virtue of the foregoing conduct and as alleged further herein:
a. Defendant McAfee violated Sections 17(a) and 17(b) of the Securities Act of
1933 (“Securities Act”) [15 U.S.C. § 77q(a)-(b)], and Section 10(b) of the Securities Exchange
Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)], and Rule 10b-5(a)-(c) thereunder [17
C.F.R. § 240.10b-5(a)-(c)].
b. Defendant Watson violated Sections 17(a)(1) and (3) of the Securities Act
and Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder; and aided and
abetted McAfee’s violations of Sections 17(a) and 17(b) of the Securities Act and Section
10(b) of the Exchange Act and Rule 10b-5(a)-(c) thereunder, in violation of Section 15(b) of
the Securities Act [15 U.S.C. § 77o(b)] and 20(e) of the Exchange Act [15 U.S.C. § 78t(e)].
9. Unless Defendants are restrained and enjoined, they will engage in the acts, practices,
transactions, and courses of business set forth in this Complaint or in acts, practices, transactions,
and courses of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
10. The SEC brings this action pursuant to the authority conferred upon it by Sections
20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)] and Section 21(d) of the
Exchange Act [15 U.S.C. § 78u(d)].
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 3 of 55
4. 4
11. The SEC seeks a final judgment: (a) permanently enjoining Defendants from
violating the federal securities laws and rules this Complaint alleges they have violated; (b) ordering
Defendants to disgorge all ill-gotten gains they received as a result of the violations alleged herein
and to pay prejudgment interest thereon, pursuant to Section 21(d)(5) of the Exchange Act [15
U.S.C. § 78u(d)(5)]; (c) ordering Defendants to pay civil money penalties pursuant to Section 20(d)
of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C.
§ 78u(d)(3)]; (d) permanently prohibiting McAfee from serving as an officer or director of any
company that has a class of securities registered under Section 12 of the Exchange Act [15 U.S.C.
§ 78l] or that is required to file reports under Section 15(d) of the Exchange Act [15 U.S.C.
§ 78o(d)], pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; (e) permanently
prohibiting Defendants from participating, directly or indirectly, in the issuance, purchase, offer, or
sale of any digital asset security; and (f) ordering any other and further relief the Court may deem
appropriate or necessary for the benefit of investors.
JURISDICTION AND VENUE
12. This Court has jurisdiction over this action pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
13. Defendants, directly and indirectly, have made use of the means or instrumentalities
of interstate commerce or of the mails in connection with the transactions, acts, practices, and
courses of business alleged herein.
14. Venue lies in this District under Section 22(a) of the Securities Act [15 U.S.C.
§ 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. Certain of the acts, practices,
transactions, and courses of business alleged occurred in this District. At least one of Defendants’
victims resides in this District, and Defendants converted into USD some digital assets obtained
from the ICOs using a service with its principal place of business in Manhattan.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 4 of 55
5. 5
DEFENDANTS
15. McAfee, age 74, previously a resident of Tennessee, currently resides in an unknown
location. McAfee previously served as the Chairman and CEO of MGT Capital Investments, Inc., a
publicly traded company, from November 2016 through 2017, and developed the popular anti-virus
software that still bears his name. McAfee tweets from the verified1
Twitter account
@officialmcafee, which had approximately 784,000 followers as of February 17, 2018.
16. Watson, age 39, resides in California. Watson began providing personal security for
McAfee in late 2017 and worked with McAfee to promote various ICOs during the relevant period.
RELATED ENTITIES
17. McAfee and Watson’s schemes involved ICO-1, ICO-2, ICO-3, ICO-4, ICO-5,
ICO-6, and ICO-7 (collectively, the “Touted ICOs”), offers and sales of digital asset securities, and
Token-8, which were offered and sold by the following issuers:
a. Issuer-1 is an unincorporated entity with its principal place of business in Bucharest,
Romania. From December 2017 to January 2018, Issuer-1 raised funds in an ICO
(ICO-1) for a token (Token-1), purportedly to construct the “first intelligence social
marketing platform” powered by smart contracts.
b. Issuer-2 is a U.K. company with its principal place of business in Lagos, Nigeria.
From December 2017 to January 2018, Issuer-2 raised funds in an ICO (ICO-2) for
a token (Token-2), purportedly to create a system to manage e-commerce businesses.
c. Issuer-3 is a Belizean company with its principal place of business in Las Vegas,
Nevada. In early 2018, Issuer-3 raised funds in an ICO (ICO-3) for a token (Token-
3), purportedly to create a program to connect contractors directly to consumers.
1
According to Twitter, a “verified account” is “an account of public interest” that is “authentic.” See
https://help.twitter.com/en/managing-your-account/about-twitter-verified-accounts.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 5 of 55
6. 6
d. Issuer-4 is a Georgia limited liability company with its principal place of business in
Atlanta. From January to February 2018, Issuer-4 raised funds in an ICO (ICO-4) for
a token (Token-4), purportedly to create a slate of horror films that it would deliver
to customers using blockchain technology.
e. Issuer-5 is a Delaware corporation with its principal place of business in San
Francisco, California. In January 2018, Issuer-5 raised funds in an ICO (ICO-5) for a
token (Token-5), purportedly to create a background music control application.
f. Issuer-6 is a Florida limited liability company with its principal place of business in
Miami. From January to February 2018, Issuer-6 raised funds in an ICO (ICO-6) for
a token (Token-6), purportedly to fund the creation of an application that would
permit businesses to share human capital resources.
g. Issuer-7 is a Virgin Islands limited company with its principal place of business in
Moscow, Russia. From December 2017 to January 2018, Issuer-7 raised funds in an
ICO (ICO-7) for a token (Token-7), purportedly to create an application that would
permit individuals to challenge each other to “dares” for compensation.
h. Issuer-8 is a U.K. private limited company with its principal place of business in
Maidstone, United Kingdom. From September 2017 to October 2017, Issuer-8
raised funds in an ICO (ICO-8) for a token (Token-8), purportedly to fund the
creation of a digital asset wallet and cryptocurrency for mobile payments.
BACKGROUND ON DIGITAL ASSETS AND ICOs
18. The term “digital asset” generally refers to an asset that is issued and transferred
using distributed ledger or blockchain technology, including so-called “cryptocurrencies,” “coins,”
and “tokens.” Generally, after being issued, digital assets may be “listed” on online digital asset
trading platforms where they can be traded for other digital assets or fiat currency such as USD.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 6 of 55
7. 7
19. “Issuers” have offered and sold digital assets in fundraising events, called “initial coin
offerings” or “ICOs,” in exchange for consideration, often other digital assets. The digital assets
offered and sold in ICOs may or may not be transferable upon delivery to investors.
20. ICOs are typically announced and promoted through public online channels. The
documents soliciting the public to acquire digital assets in a particular offering are usually in the
form of a “white paper,” i.e., marketing materials describing the project and the terms of the ICO.
To participate, investors may transfer funds to a unique digital address set up by the issuer, and the
issuer may deliver digital assets to the ICO participant’s unique digital address on a distributed ledger
or blockchain. This process may be partially automated through the use of a “smart contract.”2
21. Issuers may launch digital assets in ICOs that appreciate in value in the hands of
investors. Issuers have also raised millions of dollars in fraudulent ICOs.
22. On July 25, 2017, the SEC issued the “DAO Report of Investigation,” where it
noted that digital assets sold in ICOs may be securities subject to the federal securities laws.3
23. On November 1, 2017, the SEC’s Division of Enforcement and Office of
Compliance Inspections and Examinations issued the “SEC Statement Urging Caution Around
Celebrity Backed ICOs” (“Celebrity ICO Statement”), which noted that, in accordance with the anti-
touting provisions of the federal securities laws, “[a]ny celebrity or other individual who promotes a
virtual token or coin that is a security must disclose the nature, scope, and amount of compensation
received in exchange for the promotion.”4
2
Blockchains or distributed ledgers can record what are called “smart contracts,” which essentially
are computer programs designed to execute the terms of a contract when certain triggering
conditions are met.
3
Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The
DAO, Exchange Act Rel. No. 81207 (July 25, 2017).
4
The Celebrity ICO Statement is available at: https://www.sec.gov/news/public-statement-
statement-potentially-unlawful-promotion-icos.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 7 of 55
8. 8
FACTS
I. BACKGROUND
24. During the course of 2017, the trading price of one bitcoin (BTC) rose from
approximately $1,000 to $20,000 USD on certain digital asset trading platforms.
25. Against this backdrop, on July 17, 2017, McAfee predicted on his official Twitter
account that the price of BTC would reach $500,000 by the end of 2020. On November 29, 2017,
also on Twitter, McAfee raised his predicted price of BTC to $1 million USD per BTC by the end of
2020, purportedly according to a “model.”
26. McAfee’s extravagant posts (such as tweeting predictions about BTC price increases
and promising to “eat my d**k on national television” if such predictions did not pan out) and
interviews about his BTC predictions generated an enormous amount of publicity, especially among
the digital asset community. From June 2017—just before McAfee’s first BTC price prediction—to
December 2017, McAfee went from roughly 62,000 followers to more than 500,000 on Twitter. His
$1,000,000 BTC price prediction garnered more than 12,000 “Likes” and 8,000 “Retweets.”
27. As McAfee gained fame in the digital asset community, ICO issuers began contacting
him through Twitter direct messages (DMs), and later through at least one dedicated email address
(first tweeted out by McAfee and later managed by Watson at McAfee’s direction), to ask McAfee to
promote their upcoming digital asset offerings.
28. Years later, McAfee admitted that his statements regarding his predicted price of
BTC were merely a “ruse” intended to “onboard new users.”
II. THE ICO TOUTING SCHEME
29. Beginning in at least November 2017, McAfee (and later Watson) privately told ICO
issuers that McAfee would promote their offerings and that they could list McAfee as an adviser if
they gave McAfee a percentage of the digital assets being offered and/or payments in BTC.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 8 of 55
9. 9
30. McAfee typically interspersed promotional tweets with warnings about other digital
assets that he was not promoting or otherwise discussing. For example, on December 22, 2017,
McAfee tweeted that “Yes, there are 1,500+ coins now. And yes, most are jokes or outright scams.
But among those coins are . . . proven winners.”
31. In a December 28, 2017 interview, conducted and posted by a website targeted at the
digital asset community, and available on YouTube (the “December 2017 Interview”), McAfee
similarly warned ICO investors—in the context of distinguishing his own ICO recommendations—
that “you need to be very, very careful because there are so many scams, so many people that are
trying to steal [from] you that it’s a dangerous thing.”
32. By contrast, McAfee would typically refer to the ICOs he was promoting as
investments from which investors could profit. For example, in the December 2017 Interview,
McAfee stated that “if you want to get in at the ground floor, meaning you will get it cheaper—in
other words, no one will get in cheaper than you because you’re buying it at the offering price; it can
only go up—then start looking at ICOs, initial coin offerings.”
33. After the success of his initial ICO promotions, McAfee began demanding an up-
front payment in BTC in addition to a percentage of the digital assets offered in the ICOs, and, later,
a percentage of the total funds raised from investors in the offerings themselves, arguing that the
supposed success of certain offerings was due to his involvement.
34. Because his own compensation was tied to the fundraising success of the ICOs he
was promoting, McAfee frequently urged investors to buy the touted tokens quickly and hold them
for the long term. For example, in response to questions about the nature of his ICO holdings in a
January 10, 2018 interview (the “January 2018 Interview”), McAfee responded, “If I truly believe
that they’re the coins of the future, wouldn’t it make sense to hold on to them for a couple
years? What madman would take a 100 percent gain over taking 10,000 times that?”
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 9 of 55
10. 10
35. Tables 1-3 set forth the compensation that McAfee received with respect to, and the
approximate number of tweets he made about, each Touted ICO. McAfee did not disclose any of
these payments to investors in connection with his promotional tweets for the Touted ICOs at the
time he was making the touting statements and the ICOs were ongoing.
Table 1: McAfee ETH Payments for the Touted ICOs
ICO First Payment
Total #
of Tweets
Total ETH
Raised in
ICO
Total ETH
Paid to McAfee
USD Value Upon
Receipt
ICO-1 12/20/2017 11 23,741 ETH 5,792 ETH $6,107,570
ICO-2 1/2/2018 3 10,144 ETH 2,953 ETH $3,116,256
ICO-3 1/8/2018 3 (1 deleted) 830 ETH 449 ETH $558,403
ICO-4 1/9/2018 1 (deleted) 125 ETH 45 ETH $57,997
ICO-5 1/16/2018 5 2,027 ETH 412 ETH $428,495
ICO-6 1/19/2018 3 547 ETH 110 ETH $110,130
ICO-7 1/30/2018 14 2,655 ETH 728 ETH $669,944
Total: $11,048,795
Table 2: McAfee BTC Payments for the Touted ICOs
ICO First Payment Total BTC Paid to McAfee Value Upon Receipt
ICO-1 12/21/2017 43 BTC $619,465
ICO-3 12/12/2017 1.445 BTC $24,633
Total: $644,098
Table 3: McAfee Token Payments for the Touted ICOs
ICO Number of Tokens ICO Price per Token in USD Approximate Value in USD
ICO-1 2,003,956 $2.46 $4,929,731
ICO-2 14,505,050 $0.45 $6,527,272
ICO-3 1,500 $0.192 $288
ICO-7 1,780,000 $0.03 $53,400
Total: $11,510,691
36. McAfee and Watson ultimately transferred the BTC and ETH that McAfee received
in connection with this scheme to digital asset wallet services and digital asset trading platform
accounts in McAfee’s and Watson’s names and in the names of other individuals in McAfee’s
employ, which accounts McAfee and Watson directly or indirectly controlled.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 10 of 55
11. 11
37. For example, McAfee and Watson transferred more than $1 million USD in digital
assets to a digital asset trading platform located in this District, where the digital assets were
converted to USD by Watson’s then-wife at McAfee’s and Watson’s direction. Watson’s then-wife
then sent the money to bank accounts controlled directly or indirectly by McAfee and Watson.
38. From these transfers, Watson received approximately $316,000 in payment for his
participation in this scheme.
39. On February 8, 2018, a blogger accused McAfee, in a lengthy, public post purporting
to contain irrefutable evidence of its accusations, of receiving undisclosed compensation for touting
ICOs and suggested that readers contact the SEC. As a result, a correspondent for one of the
Touted ICOs asked Watson to help the issuing company formulate a response.
40. In response, on February 11, 2018, McAfee disclosed that he was being paid for
some of his promotions of ICOs, though even in that post he continued to make materially
misleading statements about the nature and extent of his involvement with the ICOs.
41. Until February 11, 2018, McAfee had never disclosed that he was being paid for his
promotion of multiple ICOs.
42. Even after February 11, 2018, McAfee made additional, materially misleading
statements about certain ICOs he had been promoting.
43. McAfee and Watson were located in the United States when they made many of the
promotional tweets for the Touted ICOs.
44. Investors in the United States could and did buy tokens in the Touted ICOs.
A. McAfee Unlawfully Promotes the Touted ICOs and Misleads Investors About
His Involvement with the ICOs
45. From at least November 2017 through February 2018, McAfee touted the seven
Touted ICOs through at least forty tweets and replies, some of which are set forth below.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 11 of 55
12. 12
46. As he admitted during the January 2018 Interview, McAfee was aware that his tweets
had a significant impact on the prices of the Touted ICOs and that the true nature of his
relationship to the issuer was of critical importance to investors.
47. In that interview, McAfee misleadingly highlighted another recent promotion as an
example of him supposedly being honest with the public, stating: “[I]f you look at that tweet today, I
said oh yeah, I shamelessly am saying this is something that I was involved in. So I let you know so
you can take it with a grain of salt because I’m involved. But if I don’t tell you, I’m not involved.”
48. In reality, McAfee had falsely and misleadingly stated that he was an adviser to the
issuer of that token instead of disclosing the truth: that he was a paid promoter and nothing more.
49. Further signaling the importance to investors of knowing whether McAfee was being
compensated for his endorsements of ICOs—that is, whether McAfee’s recommendations were
biased—investors repeatedly replied to McAfee’s ICO-endorsement tweets to ask whether he was
being paid for his promotions.
50. As more fully alleged below, in responses to these questions McAfee affirmatively
lied to and misled investors about whether he was receiving compensation for the touts.
51. For example on December 15, 2017, McAfee highlighted the purportedly unbiased
nature of his recommendations on Twitter in a reply to a user who had tweeted “Paid post?” in
response to McAfee’s recommendations. McAfee replied: “Get fucking real. There is no amount of
money that could make me say something I do not believe, or something I think may not happen.”
52. McAfee also explicitly denied his role as an ICO promoter in the December 2017
Interview, where he stated:
Now, I’m not saying that I’ve not tweeted out coins that I am invested in,
but when I do, I tell everybody. If I say this is a great coin and nothing else, I
promise you I don’t own any of it, I am not affiliated with it, and I’m not
interested in whether or not you buy it. What I’m interested in is educating
the public about what is available.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 12 of 55
13. 13
53. These statements were false or misleading when McAfee made them because, as he
knew or recklessly disregarded, he was, in fact, being compensated for touting the Touted ICOs.
54. As more fully alleged below, McAfee made additional false and misleading
statements to potential investors about his involvement with some of the ICOs he was touting. For
example, he publicly and falsely claimed that he was providing advisory services to some issuers’
business operations, while simultaneously confirming in private messages that he provided no actual
assistance to the Touted ICOs other than his promotions of the ICOs themselves.
55. In a private Twitter conversation, a correspondent informed McAfee that he was
buying into his first ICO, to which McAfee responded: “What’s the ICO? I’ve partnered with a
number of ICOs. They use my name and my participation in marketing materials in exchange for a
substantial percentage of the coins. It feels like I’m stealing from them by getting paid for doing
nithing [sic] . . . .”
56. When another correspondent privately approached McAfee in December 2017 about
McAfee serving as an adviser to the company’s business, McAfee responded: “Not interested. I have
no time to sell. If you want to use my name we can discuss.”
57. As more fully alleged below, McAfee also publicly and falsely claimed that he
personally invested in certain ICOs he was promoting, boasting how much money he was making
from investing in digital assets (thus misleading investors into thinking that he was making money
from identifying and investing in ICOs he believed were worthwhile) when, in reality, he was making
no such investments—he was being paid for the promotions.
58. For example, McAfee personally appeared in a rap music video that he posted to his
Twitter account in January 2018, shortly after the end of his promotion of ICO-1, called “The
McAfee Effect,” which included the lyrics: “Pickin ICOs that’s a . . . cash vault.”
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 13 of 55
14. 14
1. McAfee’s ICO-1 Tout
59. On December 17, 2017, approximately three days after the start of ICO-1, the
founder of ICO-1 (Founder-1) contacted McAfee to ask him to promote ICO-1, stating: “We do
not want to loose [sic] ourselves in the ocean of ICOs and we need your help for that.”
60. On December 19, McAfee replied that in exchange for 10 BTC and “a substantial
percentage of issued tokens,” McAfee would, among other things, “tweet reasonable numbers of
tweets, which have a huge impact on the Cryptocurrency market.”
61. Founder-1 replied to McAfee that Issuer-1 would “pay 10 BTC” for McAfee’s
promotion of ICO-1, but that Issuer-1 had not yet raised funds sufficient in ICO-1 to make such a
payment. Founder-1 instead proposed that he give McAfee daily payments amounting to 30% of the
total funds raised in ICO-1. McAfee agreed to promote ICO-1 on these terms.
62. On December 20, McAfee began his promotion of ICO-1 by tweeting from his
official Twitter account that Token-1 was “[t]he first token to open the door to a new paradigm of
social marketing” and was “a world changing coin and a world changing concept.”
63. Also on December 20, Watson’s then-wife tweeted a question to McAfee about
ICO-1 at the direction of McAfee and Watson. Seeking to increase the supposed allure of his
recommendations, McAfee publicly reply-tweeted that his “recommendation for [ICO-1] is for
experienced crypto investors only.” Despite his statement that ICO-1 was for “experienced”
investors only, McAfee quickly and soon thereafter directed another potential investor who replied
in the same twitter thread to ICO-1’s website, where the sales of Token-1 were ongoing.
64. On December 22, in a public reply to a user commenting on McAfee’s first
promotional tweet about ICO-1, McAfee insisted that “implying [Token-1] is a joke is a huge
mistake. Go to [Issuer-1’s website] and read it. You will see it is in the mold of a winner.”
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 14 of 55
15. 15
65. As McAfee began tweeting about ICO-1, Issuer-1 concurrently began promoting
that McAfee was the issuer’s main adviser and posted his picture on its website. McAfee initially
falsely created the impression that he was lending his expertise to the company, stating in replies to
questions posted by other users in response to his promotional tweets: “I am making sure that their
cyber security is perfect. Hackers are targeting coins as easy money these days.” McAfee knew or
recklessly disregarded the fact that he was not providing any cyber security guidance to ICO-1.
66. On December 20, in furtherance of his efforts to promote ICO-1 and Token-1,
McAfee also falsely tweeted that “[he] urged [Issuer-1] to let [him] assist” with ICO-1, when in fact,
as McAfee knew or recklessly disregarded, Founder-1 had sought McAfee’s promotional assistance
and McAfee was not “assisting” the company other than by making promotional tweets.
67. Later, on December 20, after McAfee confirmed to Founder-1 that he had received
his first payment for the promotion of ICO-1, McAfee coordinated with Founder-1 to further
increase the impact of his promotion by falsely disclaiming any connection between himself and
ICO-1. McAfee instructed Founder-1 that “for the next few weeks, take my name off your site. I
want to be able to leverage my Twitter with people assuming I have no relationship with you.
Removing my name now will add at least a million dollars to your sale.”
68. On December 20, McAfee tweeted that while he could not guarantee the success of
Issuer-1, he could “guarantee that [he saw] no better ICO than [ICO-1] at the current time.”
69. On December 21, McAfee publicly reply-tweeted: “If . . . you don’t mind holding a
coin for a couple of months then [ICO-1] is the best ICO out there,” and tweeted: “For those of my
trolls who call everything that I recommend a shit coin -- please read [ICO-1]’s white paper. It is
brilliant. [ICO-1] is also the first social marketing coin. Its potential could equal the success of
Twitter. So troll elsewhere or wise up and buy [ICO-1].”
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 15 of 55
16. 16
70. In a continued effort to ensure that more investors bought into ICO-1, whose
tokens could not at that time be resold on digital asset trading platforms, on December 24, McAfee
tweeted: “For everyone who has DM’d me about [ICO-1]: It is an ICO. You can’t buy it one day
and sell it the next. It is a longer term play. Wait for the ICO to finish and get listed on exchanges.
You must wait, but the returns will be way better. I explained this in my original tweet.”
71. On December 27, McAfee falsely reply-tweeted publicly: “[ICO-1] is also a great
ICO opportunity. . . . I have personally purchased a significant amount i[n] [ICO-1] . . . .” McAfee
knew or recklessly disregarded the fact that he had made no such investment in ICO-1.
72. McAfee also repeatedly promoted ICO-1 during the December 2017 Interview,
noting that “one of the reasons [he] like[d] [ICO-1] so much” is that “[t]he potential for growth is
tremendous,” predicting that “[i]f that thing does not go up by a factor of 50 in the first year [he’d]
eat [his] shoe,” and promising “it’s going to make you more money than anything you can invest in.”
73. During the December 2017 Interview, McAfee further and falsely claimed that he
was touting ICO-1 solely due to its merits and its benefits to society: “So people go . . . , ‘Why are
you promoting this?’ Because it is good for the world. It is good for you. It is good for everybody.”
74. On January 8, 2018, McAfee falsely announced on his Twitter feed that he had
“taken a formal advisory role in [ICO-1]. I heavily invested in [ICO-1], so I have a personal interest
in helping ensure that product development is properly done in a timely manner.”
75. In an attempt to further induce investors to buy into ICO-1, on January 13, McAfee
tweeted: “[ICO-1] is closing its pre-sale at 1:00 PM on January 15th. Last chance at 40% bonus.
Disclaimer . . . I am an advisor and investor of [ICO-1].”
76. McAfee knew or recklessly disregarded that these statements were false or misleading
when he made them, because in fact, McAfee never had a “formal advisory role” with or provided
cyber security advice to Issuer-1, and because McAfee never purchased any Token-1 securities;
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 16 of 55
17. 17
rather, McAfee only owned Token-1 securities because the issuer had issued them to him as
compensation for his promotions.
77. In the replies to McAfee’s initial promotional tweets about ICO-1, Twitter users
directly asked McAfee if he was receiving compensation to promote ICO-1. McAfee replied to these
questions falsely: “I do not. I merely sift through the mass [of] tokens to find the gems and share
them. It’s in everyone’s interest to support coins that improve our lives.”
78. Another Twitter user replied to one of McAfee’s tweets about ICO-1 stating that
“[t]he money goes right into John’s pocket,” to which McAfee misleadingly publicly replied, he
“[w]ish[ed] it did.” McAfee knew or recklessly disregarded these statements were false or misleading
as he was, in fact, being compensated for the promotional statements and did not sift through
tokens to “find” ICO-1 but, instead, had been contacted by Founder-1 to promote ICO-1.
79. McAfee’s false statements on Twitter about ICO-1 were important to investors
considering whether to invest in ICO-1. For example, one commenter on a digital asset discussion
forum stated that “[a]dding JM [John McAfee] best strategic move I have ever seen an ICO do”
because it demonstrated that the company was “getting accredited by people in the industry,” which
would “get people to believe in it more.” Others noted that ICO-1 was an “[i]nteresting project and
if John McAfee said what he said I’m in,” or that McAfee “has had success in other ICO[s] as well
and believes in this product.”
80. Token-1 tokens were sold in ICO-1 for 0.003 ETH per token, with additional tokens
provided as a “bonus” depending on when the investor invested. Today, Token-1 no longer trades
on digital asset trading platforms, and thus has little to no value.
2. McAfee’s ICO-2 Tout
81. On January 1, 2018, McAfee tweeted: “ICO of the week: [ICO-2]. [Issuer-2] is a
distributed version of Amazon.com. [I]t allows simple and secure creation of e-commerce sites –
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 17 of 55
18. 18
searchable in the same manner as Amazon – but with no Amazon as middle man. This could be as
huge as it gets in the blockchain world.” Also on January, in reply to a response to this tweet,
McAfee said: “You buy by clicking [link to the “crowdsale” page on ICO-2’s website].”
82. On January 3, McAfee reply-tweeted: “. . . [ICO-2] will likely replace Amazon.com. It
is the first distributed version of Amazon. If you cannot see the value of a distributed version of
Amazon - without the cost of goods increased by the middleman (Amazon) then I’m sorry.”
83. On January 6, McAfee tweeted: “I have become an advisor to [ICO-2]. I
recommended them recently and, as an early investor in their ICO, I want to make sure they succeed
in implementation. I love Amazon,com [sic], but I want everyone to have the ability to be their own
Amazon if they want to start an e-business.”
84. McAfee knew or recklessly disregarded that this statement was false or misleading
when he made it because McAfee was being secretly paid for these promotions, he never had an
advisory role with Issuer-2, and his only holdings related to ICO-2 were not the result of his
investment, but instead had been paid to him by the company as compensation for his promotions.
85. Issuer-2 sold 1,929 tokens in ICO-2 for 1 ETH, or approximately $0.45 per token as
of January 2, 2018. Today, Token-2 trades for approximately $0.003338 on digital asset trading
platforms, and are essentially worthless.
3. McAfee’s ICO-3 Tout
86. On December 7, 2017, a representative of Issuer-3 contacted McAfee by Twitter
DM to ask if McAfee “[w]ould . . . consider being an advisor for [Issuer-3].”
87. McAfee responded by asking whether Issuer-3 had a white paper, and stating that he
“require[d] a sign on payment plus a percentage of the tokens.”
88. The representative responded to McAfee that he could “give [McAfee] $25,000 USD
in BTC as a retainer up front/right now and then more BTC after [its] pre-sale and a large amount
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 18 of 55
19. 19
after the ICO for a total of $1,000,000 USD worth of BTC.” The representative also stated that he
would give McAfee “a portion” of the tokens that had been reserved for the Issuer-3 “founders’
pool,” and that the white paper was “in draft mode” so he could not provide it to McAfee.
89. McAfee, having not seen the ICO-3 white paper, nevertheless replied: “When I
receive the $25,000 I will announce my involvement and begin promoting you. You are correct – my
involvement will double your sales at the very least.”
90. On December 12, Issuer-3 sent McAfee BTC worth approximately $24,633.
91. On December 13, McAfee tweeted: “The skilled trade market . . . has enormous
middle man overhead – costing consumers billions each year. [Token-3] decentralizes this market
using smart contracts. Disclaimer – these folks are friends of mine – but brilliant friends.”
92. McAfee highlighted the influence of his promotions in a private message to a
representative of Issuer-3 on December 14, saying that his tweet from the previous day had been
seen 86,903 times, and had 3,085 “interactions” (i.e., generated clicks, replies, likes, and other actions
by readers) with the tweet.
93. On December 19, McAfee tweeted: “One of the most interesting brick and mortar
ICOs I’ve seen. Shout out to [ICO-3]. Note: These folks are friends of mine.”
94. On January 6, 2018, which was one of the first days of the ICO-3 offering, McAfee
tweeted: “ICO of the week: [ICO-3]. Disclaimer: I am an investor and fan. Already has more than
50,000 customers matched with home repair pros and their growth is stunning. Removes
middlemen, reduces fraud, slashes cost. Who wouldn’t want a piece of [Issuer-3?]”
95. In fact, as McAfee knew or recklessly disregarded, he had never invested in ICO-3,
and was not “friends” with its issuer. The only assets McAfee received in connection with ICO-3
were not the result of his investment, but were paid to him as compensation for his promotion.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 19 of 55
20. 20
96. On January 7, McAfee privately messaged the representative of Issuer-3 saying that
his January 6 tweet had 480,470 “Impressions” and 32,409 “Total engagements” on Twitter.
97. Also on January 7, 2018, McAfee sent an ethereum wallet address to the
representative of Issuer-3 to receive the ETH payments for his promotion of ICO-3.
98. On January 11, the representative of Issuer-3 received a Twitter DM from McAfee’s
official Twitter account, signed by Watson as “Executive Advisor,” stating:
Mr. McAfee has decided to discontinue promoting your ICO. The daily
payments have been insignificant compared to the other ICOs that he is
promoting. Since there are a limited number of tweets that he can do each
week and have the tweets remain effective, he believes, from a business
standpoint, it makes more sense to tweet an ICO that is performing at least
closer to average return. There is no need to transfer any more funds. Mr.
McAfee and the team wish your ICO all the best. Thank you.
99. McAfee subsequently deleted his January 6, 2018, tweet concerning ICO-3.
100. Token-3 tokens were sold in ICO-3 for 6,000 tokens per 1 ETH, or approximately
$0.192 per token as of January 7, 2018. Today, Token-3 trades for approximately $0.0017, and are
thus essentially worthless.
4. McAfee’s ICO-4 Tout
101. On December 31, 2017, a representative of ICO-4 emailed McAfee to retain him to
promote ICO-4, and on January 1, 2018, noted that Issuer-4 hoped to raise 6,900 ETH, worth
approximately $5 million USD, which would allow them to make horror films, the intended purpose
of the company, and proposing to give McAfee 30% of the amount raised.
102. The representative further discussed how McAfee could profit from the company’s
digital assets if he promoted ICO-4, but noted: “Of course I can’t mention any of this in our
whitepaper since the SEC views mentioning even the smallest hint of profit as a qualifier to deeming
a token a security, but I’ve added enough for an experienced investor to read between the lines.”
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 20 of 55
21. 21
103. On January 1, McAfee replied: “With my help you will quickly generate 6,900 Ether.
You might consider upping it to at least 9,000 +.”
104. The Issuer-4 representative replied to McAfee: “The smart contract we are using has
a hard cap of about 50,000ETH if we were to give you 40% of the supply of tokens. . . . My offer to
you is 40% of the tokens, and 30% of the ICO take. Paid daily.” McAfee replied “[a]ccepted,” and
forwarded the correspondence to Watson.
105. On January 7, Watson replied to the email chain, representing himself as McAfee’s
“Exec Advisor” and asking the issuer to call his “office phone to discuss further details . . . .”
106. On January 8, after arranging a call between the representative of Issuer-4 and
McAfee, Watson, acting at McAfee’s direction, reconfirmed by email to Issuer-4 the promotional
agreement “for the deal of 40% tokens and 30% per day for the duration of [ICO-4].”
107. McAfee then tweeted: “2nd Weekly ICO choice: [ICO-4]. I couldn’t resist. [Token-4]
fuels financing and distributing horror films. It takes power from the boardroom and gives it back to
the filmmakers - hopefully encouraging creativity. I love horror films and will invest.” As McAfee
knew or recklessly disregarded, he had no intention of investing in ICO-4, but was falsely tweeting
that he would because Issuer-4 had paid him to promote the token.
108. McAfee subsequently deleted his tweet concerning ICO-4. On January 20, the
representative of ICO-4 wrote to McAfee by email: “A few members of our community noticed you
had deleted the [Issuer-4] tweet. Are there any issues?” Watson replied: “Unfortunately, your ICO is
not doing as well as ICOs Mr. McAfee has promoted in the past. We are discontinuing the
promotion at this time.”
109. Token-4 tokens were sold in ICO-4 for approximately $0.114 per token as of January
8, 2018. Today, Token-4 trades for approximately $0.000212, and are thus essentially worthless.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 21 of 55
22. 22
5. McAfee’s ICO-5 Tout
110. On January 15, 2018, Watson, acting at McAfee’s direction, sent a representative of
Issuer-5 a digital wallet address controlled by McAfee and said: “Mr. McAfee will begin promoting
your ICO very shortly. 24 hours after his first tweet, a payment of 25% of ICO income should be
sent on a daily basis.”
111. McAfee then tweeted: “Second ICO of the Week: [ICO-5]: [link to ICO-5 Website].
Will likely replace Spotify and become the virtual jukebox for businesses. . . . Love this one.”
112. On January 19, McAfee tweeted: “[Issuer-5] reached its soft cap today.
Congratulations,” and posted a link to the ICO-5 offering website.
113. On January 20, McAfee tweeted: “[ICO-5] seems on track. A goid [sic] investment
for the ICO adherents among you,” and posted a link to the ICO-5 offering website.
114. On January 22, McAfee retweeted a tweet by his own spouse regarding her
purported investment in ICO-5 and said: “It’s a sound investment and the [Issuer-5] team would
have to fuck up royally not to succeed . . . .”
115. On January 26, McAfee tweeted: “[Issuer-5] on track to reach its hard cap,” and
posted a link to the ICO-5 offering website.
116. Token-5 tokens were sold in ICO-5 for 70,000 tokens per 1 ETH, or approximately
$0.018 per token as of January 15, 2018. Today, Token-5 trades for approximately $0.00011, and are
thus essentially worthless.
6. McAfee’s ICO-6 Tout
117. On January 14, 2018, Watson, acting at McAfee’s direction, wrote to a representative
of Issuer-6, who had previously reached out to a McAfee-controlled email address:
Mr. McAfee just finished two ICOs that he was advising and is available as
an advisor. If you are interested, he charges 25% of the ICO income, paid
daily, and a percentage of the coins. He will only work with ICOs that use
reputable Crowd funding sites so that he is assured the daily income counter
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 22 of 55
23. 23
is correct. If you meet these guidelines, he might be able to help advise you.
He would also require the time necessary for your site to be audited, to
ensure that he is not recommending a questionable company. Thank you.
118. On January 15, Watson, again at McAfee’s direction, wrote to the representative of
Issuer-6: “If you can provide evidence of having a way to show proof of daily ICO income, Mr.
McAfee can begin his first promotional tweet tonight. Please keep in mind, 25% of your ICO daily
income is required every day of your ICO sale. Generally, he also takes a percentage of coin . . . .”
119. The representative of Issuer-6 agreed to these terms, and wrote to Watson: “Since
Mr. McAfee will become an advisor, I have two final questions. 1) can we add him to our website
now? 2) how do we reach him in case we have a question?”
120. Watson replied:
Mr. McAfee has requested that you wait until two days after his first tweet to
place his name on your website. There is a reason for everything. Please
provide exact date of your ICO start date, or has it already begun? Whatever
the answer, Mr. McAfee’s timing, method, and tweets is [sic] designed to
promote your ICO to its max potential. If we are in agreement please
confirm start date and Mr. McAfee will send his first tweet shortly. I am
sending his Etherium [sic] address in next email. The 25% will be due
24hours [sic] after his first tweet.
121. On January 17, McAfee tweeted: “Want to park your money in a safe place that may
have great upside? ICOs are King in this market . . . Be sure to fully read the white papers and check
out carefully. I’m considering [ICO-6],” and posted a link to ICO-6’s website.
122. On January 18, McAfee tweeted: “Audit of the [ICO-6] which I recommended
yesterday. It should answer the many questions about [Issuer-6] which I received,” and included a
link to a supposed audit of ICO-6.
123. On January 24, in response to questions in his replies on Twitter about whether he
was compensated for his tweet touting ICO-6, McAfee wrote:
Why does everyone assume I fucking get paid for everythings [sic] I tell
people to check out???????? Can’t I fucking point out items of interest? Why
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 23 of 55
24. 24
the fuck do I need money. Google me. And it’s fucking rude to ask peopler
[sic] what they make. How much do you make at your work??”
124. In fact, at this time McAfee had already begun receiving payments from ICO-6,
which ultimately totaled approximately $110,130 USD worth of ETH.
125. On January 24, McAfee falsely and misleadingly tweeted that he had chosen ICO-6
to recommend for investment because of “the potential value of the coin” that supposedly “could
make [ICO-6] a giant,” when, in reality, and as he knew or recklessly disregarded, he had not chosen
ICO-6 for investment, but, rather, was being paid to promote the ICO.
126. Token-6 tokens were sold in ICO-6 for 3,000 tokens per 1 ETH, or approximately
$0.338 per token as of January 17, 2018. Today, Token-6 no longer trades on digital asset trading
platforms, and has little to no value.
7. McAfee’s ICO-7 Tout
127. On January 29, 2018, McAfee tweeted: “A fascinating ICO – [ICO-7]. Combines
social media with physical action. They already have 1.2 million users. A combination of MTV,
Jackass and viral videos, it allows users to challenge each other to perform any act . . . ,” referring to
the supposed purpose of the fundraise for ICO-7.
128. On January 29, McAfee also tweeted: “We found out that [ICO-7], the ICO I talked
about earlier today, has both an Android and IOS app. We have been using it all afternoon. This iis
[sic] some fun shit. Try it yourselves. Just one more reason I believe this coin is going to fly.”
McAfee subsequently posted additional tweets about his use of the Issuer-7 app.
129. On January 31, McAfee tweeted: “[ICO-7] is performing well. The token price is
going up 50% tomorrow. If you invest in ICOs you should check this one out before tomorrow.”
130. In a reply to his January 31 post, McAfee continued to urge readers to invest in ICO-
7: “An ICO is an initial coin offering. You buy the Coin before it is listed on an exchange. More
often than not the early buy in returns far more than buying the Coin on an exchange.”
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 24 of 55
25. 25
131. On February 5, McAfee tweeted: “[ICO-7] is undervalued right now. In the next 2
years this project will disrupt the gaming and entertainment market which is a $100 billion dollar
opportunity—a gem of information . . . .”
132. An ICO-7 “cold storage” wallet address (a device or software used to store digital
assets offline) made nine direct ETH transfers to McAfee, on a daily basis from January 30 through
February 7, 2018, as payment for his promotions.
133. Token-7 sold for between approximately $0.02 and $0.04 during ICO-7. Today,
Token-7 trades for approximately $0.000424, and is thus essentially worthless.
B. McAfee Continues to Deceive Investors About His Role in the Touted ICOs
After His Touting Scheme Is Uncovered
134. On February 8, 2018, a blogger on an online messaging board posted a message
(“the February 8 Post”) speculating about McAfee’s relationship to ICO-7, noting that: (a) ICO-7
had raised less than 10% of its funds from the beginning of the ICO around December 25, 2017, to
before McAfee’s first promotional tweet on January 29, 2018; (b) interest in the ICO had increased
substantially after McAfee’s series of tweets in the week following January 29, 2018; (c) prior to
January 29, 2018, investors could use six forms of payments to invest in ICO-7 but that on that date
all funds started flowing into a consolidated Ethereum address; (d) McAfee had been announced as
an “advisor” to ICO-7 on January 30; and (e) the consolidated address, which had been made public
by the team behind ICO-7, had made several large transfers of the funds raised to one single wallet.
135. The team behind ICO-7 had in fact announced that all of the ETH raised would be
transferred to a single “cold storage” wallet, supposedly due to the potential risk of hacking.
136. Based on the foregoing, the author of the February 8 Post argued that McAfee took
what had been an unsuccessful project and pumped it to unwitting investors for undisclosed
compensation, concluding “that the transactions [of ETH transfers] were a reward for advertising by
McAfee,” and that McAfee’s actions were “a good reason to write . . . to SEC [sic].”
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 25 of 55
26. 26
137. Indeed, the nine consecutive transfers to McAfee from the “cold storage” ICO-7
wallet address (all made after McAfee’s promotions began) were both easy to trace and difficult to
explain, as McAfee had not disclosed that he was being compensated for his promotion of the ICO-
7, while it was apparent that payments from the ICO-7 issuer’s “cold storage” wallet were being sent
to a single digital asset immediately after McAfee’s promotion began.
138. On February 9, a member of the ICO-7 team forwarded a link to the February 8
Post to Watson, asking him to coordinate a response with McAfee, noting people would “become
suspicious if we . . . remain silent for a long time.” Watson forwarded the email to McAfee.
139. On February 11, McAfee issued a statement on Twitter entitled “The McAfee Team
and ICOs,” where he for the first time admitted that he was being paid for promotions, while
repeating his false claims that his team reviewed and picked the “best” ICOs for his
“recommendations,” and that he was offering “advice” (in addition to promotional services) to the
issuers. The statement refused to disclose how much McAfee charged for his “services” claiming
“[i]t is no one’s business other than ours and the companies we support.”
140. McAfee knew or recklessly disregarded that these statements were false or misleading
when he made them, including because his team did not “pick” the ICOs for his recommendations
and because he did not offer “advice” beyond promotional services to the ICO issuers.
141. Following the February 8, 2018 blog post accusing McAfee of receiving undisclosed
compensation and McAfee’s February 11, 2018, statement, fewer issuers contacted McAfee to
promote their ICOs and the impact of his touts receded considerably.
C. McAfee’s Scheme to Cash Out of Proceeds Earned from the Touted ICOs
142. After he was forced to disclose his compensation arrangement with the ICO issuers
he had been promoting and his promotional efforts became ineffective, McAfee was left with
millions of the digital assets that he had received as payment for his earlier touts.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 26 of 55
27. 27
143. Although these digital assets had been worth millions of dollars around the time of
the ICOs, by March 2018 they were worth a fraction of that amount.
144. To unload these digital assets, McAfee orchestrated a scheme of paying a separate
promoter to tout the same tokens offered in the Touted ICOs without disclosing the arrangement.
145. In February 2018, McAfee had recognized that “bots” had been spamming his
Twitter posts and appropriating his identity on social media, and had hired an individual using the
Twitter handle @McAfeeclones to target and attempt to remove these online bots.5
146. Later, McAfee used @McAfeeclones’ bots to promote the tokens he had previously
touted to increase the price of these tokens so that he could sell them at inflated prices.
147. On March 3, 2018, McAfee sent a private Twitter DM to @McAfeeclones explaining
that he and his team had been recommending an ICO once or twice a week. McAfee wrote: “When
we do a promotion, I need someone who is a member of the major crypto trading blogs on the
various platforms to help us with outr [sic] promotion.”
148. McAfee explained that he wanted @McAfeeclones to:
1 . . . [F]ind the largest or most influential blogs, chat boards, social media
groups, etc. in the realm of crypto investing, crypto trading, crypto
promotion, ICO discussion groups, etc. 2. Join these groups and start
interacting with existing members. Do not mention ne [sic] or prom9te [sic]
anything at all until -- 3. I give you an ICO or existing coin to promote. I will
write your promotional posts for you for the first few months.
149. On March 6, McAfee instructed @McAfeeclones to promote the two digital asset
securities that constituted McAfee’s largest holdings from the ICO promotion scheme: Token-1 and
Token-2. @McAfeeclones then began “promoting every day in various groups.”
5
A “bot” is a software application that runs automated tasks (scripts) over the Internet.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 27 of 55
28. 28
150. These promotions were successful in increasing the price of these assets. Less than a
week into this new scheme, @McAfeeclones wrote to McAfee that there was “[p]retty good
movement in price on [ICO-2] today, [ICO-1] only a little bit. I’ll work on promoting [it] more.”
151. In June 2018, McAfee requested another promotion of Token-2 by @McAfeeclones,
as he held more than 14.5 million tokens obtained as a part of his illegal promotion of ICO-2.
152. In total, McAfee sent 52 ETH (worth approximately $25,000) to @McAfeeclones
between March 2018 and June 2018 in connection with these undisclosed promotional efforts, and
@McAfeeclones did in fact promote Tokens-1 and 2.
153. McAfee undertook other efforts to pump the remaining tokens from his ICO
promotions. On May 24, 2018, McAfee tweeted: “McAfee Short Term Predictions,” which listed
McAfee’s target prices for certain digital assets, including “[ICO-2] will hit $.52 by mid July.” On
May 23, Token-2’s closing price was $0.089, but increased to $0.11 and then $0.15 in the next two
days, continuing to rise until it peaked at $0.26 on June 3, before falling.
154. McAfee did not disclose that he still held a position in these tokens and that he and
others were secretly attempting to dump McAfee’s ICO-2 digital assets at the time of this tweet.
D. McAfee Understood That His Conduct Was Illegal
155. From the outset McAfee knew or recklessly disregarded that his ICO promotions for
undisclosed compensation were illegal.
156. McAfee understood that his conduct was wrongful since at least June 2017, when he
began working on the launch of at least two ICOs of his own and wrote to an employee in
connection with one of these offerings that the ICO “can’t be seen as an IPO [initial public
offering]” because such a classification would have required the offerings to be registered with the
SEC.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 28 of 55
29. 29
157. At that time, McAfee closely followed developments in the regulatory space
concerning digital assets, and certain of his correspondents specifically warned him that certain
ICOs likely were securities offerings and that celebrities who promote ICOs without disclosing their
compensation may violate the federal securities laws. For example:
a. On July 26, 2017, shortly after the Commission issued the DAO Report, one
of his employees (Employee-1) sent McAfee an article entitled, “Oh Shit, the SEC Just Ruled
That Ethereum ICO Tokens Are Securities,” which had as its subheading, “Some ICOs
must be registered or they’re unlawful.”
b. On November 2, 2017, the day after the Celebrity ICO Statement was issued,
McAfee also was explicitly warned by a correspondent via private Twitter DM about
potential regulatory issues when the correspondent noted that “I hope the SEC statement
about ICO doesn’t negatively affect anything with McAfee coin,” a token that McAfee had
been considering issuing under his own name.
158. In December 2017, McAfee negotiated with another entity to provide it consulting
services. Their agreement, for which McAfee provided edits, provided that “taking a benefit of any
kind in exchange for writing . . . about a security or cryptocurrency could be a violation of law.” The
agreement further prohibited scalping (a term defined below) in any form.
159. On December 27, 2017, a correspondent proposed to McAfee that McAfee “buy the
dip” – i.e., buy a digital asset at a low price – and then endorse a token. He then texted McAfee that
“[i]f we don’t pay you, you don’t have to water down your endorsements by pointing [out that] you
are being paid as SEC required.”
III. MCAFEE AND WATSON’S DIGITAL ASSET SCALPING SCHEME
160. Scalping is an illegal scheme whereby someone (i) obtains securities for his own
account prior to recommending or touting it to others; (ii) does not disclose in the tout the complete
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 29 of 55
30. 30
truth about his ownership of the securities and his plans to sell them; and (iii) proceeds to sell the
securities following the tout’s dissemination into the increased share price and trading volume
generated by his tout. McAfee and Watson engaged in this type of conduct with respect to at least
one digital asset: Token-8.
161. McAfee knew that the recommendation of a digital asset security for purchase while
simultaneously trying to offload a position in the digital asset was wrongful, just as he knew his
undisclosed promotions were unlawful. In the December 2017 Interview, McAfee warned investors
to view digital asset recommendations with suspicion because: “[Unscrupulous promoters] go, ‘Oh, I
love this one, or I love that one, and this looks great.’ They don’t know why they’re saying it. Maybe
they’re saying it because they bought 100,000 coins and they can’t sell them, right?”
162. Nevertheless, between December 2017 and February 2018, McAfee and Watson
identified digital assets, including the digital asset security Token-8, with respect to which they
believed McAfee’s Twitter promotions could move the market, accumulated large positions in those
digital assets in McAfee’s accounts, recommended the digital assets in tweets, and then dumped
McAfee’s holdings in a digital asset as the asset’s price increased in response to the tweet.
163. Starting in late 2017, McAfee announced that he would be tweeting a daily token
recommendation. Ultimately, between December 21, 2017 and February 22, 2018, McAfee
recommended at least 10 digital assets as his “Coin of the Day” (later “Coin of the Week”).
164. At the outset of this scheme, McAfee tweeted that “[m]ost 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 that change.”
165. McAfee’s claims that he would tell his followers when he had a position in a digital
asset or that he had no position in these tokens were false, as he knew or recklessly disregarded.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 30 of 55
31. 31
166. In advance of his market-moving tweets, McAfee had an employee purchase each
token several days prior to the announcement and then sell out shortly after McAfee’s tweet.
McAfee closely followed the sales of the digital assets that his employees conducted and generally
instructed his employees to sell the digital assets once the price had appreciated 30%.
167. On December 20, 2017, Watson performed several Google searches about Token-8.
Watson then discussed Token-8 with McAfee, who sent a Skype message two hours later to
Employee-1 asking “[w]hat do you think of [Token-8?]”
168. For the next two hours, Employee-1 sent messages to McAfee detailing his thoughts
on the company and its token. Employee-1 wrote that he was unable to obtain critical information
about the company, noting that he was unable to sign up for an account “to see what it even is,” and
that he was “fairly sure the white paper is stored next to the arc of the covenant in that Indiana jones
warehouse.” Nonetheless, the employee was able to glean some basic information on the company
and the token from other sites and provided McAfee with a high level overview.
169. On December 21, McAfee announced on his Twitter feed: “[Token-8] – the first of
my daily coin reports” and attached a screenshot containing what purported to be his analysis of the
company. In that purported analysis, McAfee made numerous positive claims about Token-8,
including that “[a]t $0.08 it is seriously cheap,” without disclosing that he had accumulated a position
inToken-8 and planned to sell the tokens for a profit following his recommendation.
170. McAfee knew or recklessly disregarded that his misleading Twitter promotions
would affect the price of Token-8—indeed, he intended that very result.
a. For example, as Employee-1 explained to McAfee in a message: “we both
know your name carries weight over there [in New Zealand, where Token-8 was traded on a
digital asset platform] like no other . . . they are literally going to shit their pants when they
wake-up tomorrow and see they just got a 500,000 endorsement equivalent” and “I think
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 31 of 55
32. 32
your word (especially as far as spreading this platform to the united stated [sic] will be
tremendous).”
b. The interviewer during the January 2018 Interview similarly stated his belief
that McAfee’s tweets moved digital asset prices for already-trading tokens anywhere between
50 and 350%, and McAfee acknowledged in that interview that trading by bots on the tokens
increased their “pump and dump potential.”
171. Nearly all of the statements in McAfee’s purported analysis of Token-8, posted on
December 21, which were presented as McAfee’s personal opinion and as if based on his careful
review, were in fact taken almost verbatim from Employee-1’s research, conducted without
reviewing the company’s white paper or looking at its website. Several of the claims were also false,
such as that McAfee had purportedly reviewed numerous messages referring to Token-8 as “the
holy grail of crypto”—a line that McAfee actually copied from his employee to further his scheme.
172. Following his announcement regarding Token-8, McAfee falsely told a Twitter user
that he did not own the token. The user asked where Token-8 could be purchased. McAfee referred
the user to a New Zealand-based digital asset trading platform and stated: “You ask how I cannot
know [where the token trades] - - I own no [Token-8]. I am not pumping for my gain. I am showing
you the incredible value of supporting a coin that will change the world.”
173. McAfee knew or recklessly disregarded that these statements were false or misleading
when he made them because he was doing exactly that—pumping Token-8 for his own gain, with
the undisclosed intention to sell it once he had sufficiently inflated its value.
174. At the direction of McAfee, two members of his team had invested 4 BTC into
Token-8 prior to the pump—the equivalent of roughly $70,000 at the time. The price of Token-8
rose 50% immediately after McAfee’s tweet—from $0.08 to $0.12, before returning shortly after to
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 32 of 55
33. 33
roughly $0.09—generating instant profits for McAfee and his team, which they realized by selling
McAfee’s Token-8 holdings on the New Zealand-based digital asset trading platform.
IV. WATSON’S ADDITIONAL ACTIONS WITH RESPECT TO THE SCHEMES
175. Watson participated in and provided substantial knowing or reckless assistance to
McAfee in connection with McAfee’s ICO promotion and scalping schemes in additional ways to
those described above.
176. Watson triaged the requests from ICO issuers for promotion for McAfee’s approval,
and negotiated the terms of the undisclosed payments for promotions on McAfee’s behalf. For
example, in a January 2018 email, sent by Watson to himself, with the subject line “What to say,”
Watson wrote: “Mr. McAfee promotes ICOs for 25% of the ICO income plus a percentage of the
coins. Please let us know if you are interested.”
177. To deceive investors into thinking McAfee was impartial, Watson instructed at least
some of the Issuers conducting ICOs that McAfee was promoting not to indicate on their social
media accounts or websites that McAfee was involved with their ICOs when McAfee first began
tweeting about them.
178. Watson also received deceptive proposed language for promotional tweets from the
issuers, which he passed on to McAfee, who then included the language in his tweets. These tweets
did not disclose that McAfee was being compensated for his posts.
179. Watson had his then-wife convert digital asset proceeds from the touting and
scalping schemes into fiat currency, send the funds to bank accounts he and McAfee controlled, and
directed his then-wife to tweet fake interest in an ICO that McAfee was promoting to create a
deceptive illusion of interest in that ICO.
180. Watson received at least $316,000 in proceeds from the ICO touting scheme, and
helped McAfee cash out the funds and digital asset securities McAfee was paid for his promotions.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 33 of 55
34. 34
181. Watson also knew that the digital asset offerings McAfee promoted were securities
offerings and that McAfee’s conduct was illegal. For example, in January 2018, the CEO of an ICO
issuer complained to Watson by text message that “I’m getting a bunch of grief about the Howey
Test due to the SEC chairman’s last rant about crypto” (referring to the Supreme Court’s decision in
SEC v. W.J. Howey, 328 U.S. 293 (1946), and, presumably, to a speech by the SEC’s Chairman which
can be found at https://www.sec.gov/news/speech/speech-clayton-012218), to which Watson
replied, “Yeah it’s a crazy world right now.” Watson nevertheless continued to negotiate with the
CEO and had McAfee tweet about its ICO for undisclosed compensation.
V. THE TOUTED ICOs AND TOKEN-8 WERE OFFERED AND SOLD AS
INVESTMENT CONTRACTS AND WERE THEREFORE SECURITIES
182. The digital assets offered and sold in the Touted ICOs and in ICO-8, were offered
and sold as “investment contracts” and were therefore securities within the meaning of Section
2(a)(1) of the Securities Act [15 U.S.C. § 77b(a)(1)] and Section 3(a)(10) of the Exchange Act [15
U.S.C. § 78c(a)(10)], because they were offered and sold to potential investors as an investment of
money in a common enterprise with an expectation of profits to be generated from the efforts of
the issuers and/or other third parties.
183. The Touted ICOs and ICO-8 thus constituted offers and sales of securities.
184. All of the issuers of the Touted ICOs and of ICO-8 accepted ETH in exchange for
the tokens they were selling; ICO-1, ICO-3, ICO-7, and ICO-8 also accepted BTC; and ICO-3 and
ICO-7 also accepted fiat currency. Each of these represents an investment of “money” for purposes
of the determining the existence of an investment contract under the federal securities laws.
185. Before and at the time of ICO-1 for Token-1:
a. Issuer-1 led prospective investors to reasonably expect profits based on the
efforts of others by, among other things, referring to ICO participants as “investors,” and
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 34 of 55
35. 35
explaining that the company would determine how many tokens it would retain at the end of
the crowdsale in part to “protect investors.”
b. ICO-1 investor assets were pooled to fund Issuer-1’s business model and
Issuer-1 reserved 35% of all Token-1s for itself.
c. Issuer-1 touted its ongoing and promised future efforts to increase the value
of Token-1, by stating, among other things, specific actions that the company intended to
take following completion of the offering, including research and development; creating
strategic partnerships and joint ventures; establishing data centers; and creating the platform.
Issuer-1 also stated that a significant portion of the funds raised in ICO-1, totaling 55% of
the token total value, would be allocated to these activities, among others.
d. Issuer-1 emphasized to potential investors that Token-1 would be traded on
digital asset trading platforms shortly after the end of the ICO-1, and specifically stated: “the
exchanges will list [Token-1] end of February, after the ICO ends. We are discussing with all
major exchanges currently.”
186. Before and at the time of ICO-2 for Token-2:
a. Issuer-2 led prospective investors to reasonably expect profits based on the
efforts of others by, among other things, discussing the profit potential of Token-2 in public
fora, including by stating: “I can’t give any details about the price a token would be on
exchanges. What [I] can tell you however is that spending 1btc gives you 2btc worth of
tokens during presale. A smart move would be to keep all but if you are in for short term
profits then you can always sell your bonus a get some return on investment . . . .”
b. Investor assets were pooled to fund Issuer-2’s business model and Issuer-2
disclosed that it had distributed 15% of all tokens to itself.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 35 of 55
36. 36
c. Issuer-2 touted its ongoing and promised future efforts to increase the value
of Token-2, by stating, among other things, specific actions that the Issuer-2 team intended
to take following completion of the offering, including making technological improvements
to the platform; marketing; user training; and establishing a token buyback program. Issuer-2
stated on its Twitter feed that “we’re all workin’ hard to make this a winner for all.”
d. Issuer-2 emphasized to potential investors that Token-2 would be traded on
digital asset trading platforms shortly after the end of the ICO-2, specifically stating: “Yes
[you can re-sell Token-2 right after purchasing in the ICO] . . . if you have a small list of
investors . . . you can be very smart and scoop as many tokens during presale (100% bonus).
. . . After presale the scarcity starts . . . . And price doubles . . . . You can then sell your bonus
to your investors at crowdsale price . . . .”
187. Before and at the time of ICO-3 for Token-3:
a. Issuer-3 led prospective investors to reasonably expect profits based on the
efforts of others by, among other things, referring to ICO participants as “investors,” and
claiming that Token-3 represented a “profit sharing token that also has a utility aspect.”
b. The white paper for ICO-3 explained that the “[Token-3] is the investor’s
stake in [Issuer-3]. This ensures that the value of [Token-3] grows over time, as [Issuer-3]
grows through the United States and internationally.”
c. Investor assets were pooled to fund Issuer-3’s business model, including
creating the platform for Token-3, and Issuer-3 disclosed that it has reserved 20% of all
tokens for management and another 20% of the tokens for the company.
d. Issuer-3 touted its ongoing and promised future efforts to increase the value
of Token-3, by highlighting, among other things, the expertise of Issuer-3’s team and the
specific steps the company intended to take at the completion of the offering, including the
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 36 of 55
37. 37
development of the platform, the recruitment of contractors, and the marketing of the
company’s services. Comments from investors in public fora made clear that these offering
participants valued the experience of the team.
188. Before and at the time of ICO-4 for Token-4:
a. Issuer-4 led prospective investors to reasonably expect profits based on the
efforts of others by, among other things, noting to potential investors in a public forum that
“[s]econdary markets are very important for tokens, [Token-4] included,” and that they
“can’t really go into detail about that subject otherwise I could get in trouble with the SEC.”
b. Investor assets were pooled to fund Issuer-4’s business model, and Issuer-4
disclosed that its founders and partners had retained 20% of all tokens.
c. Issuer-4 touted its ongoing and promised future efforts to increase the value
of Token-4, by, among other things, touting the expertise of the company’s team and its
advisers, which included individuals who had “created some of the most successful horror
movies in history.”
d. Issuer-4 further explained that unsold tokens from the offering would be
used by the company to attract additional talent and develop partnerships with individuals
and companies to help Issuer-4 reach its goals.
e. Issuer-4 emphasized to potential investors that Token-4 would be traded on
digital asset trading platforms shortly after the end of ICO-4.
189. Before and at the time of ICO-5 for Token-5:
a. Issuer-5 led prospective investors to reasonably expect profits based on the
efforts of others by, among other things, touting the profit potential of Token-5 in public
statements to potential investors. In a press release, Issuer-5 explained that “[Issuer-5] will
introduce tokens ([Token-5]) for the platform that would give patrons voting rights and even
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 37 of 55
38. 38
allow them to add songs to the playlists. The trading of those tokens is expected to drive up
the cost of each [Token-5][,] which will create profits for early [ICO-5] investors.” The
company also noted that “[w]e are so confident in the success of the [ICO-5] because we see
the explosion of profits that is already taking place.”
b. Investor assets were pooled to fund Issuer-5’s business model, and Issuer-5
disclosed that it had retained 15% of all tokens for the company.
c. Issuer-5 touted its ongoing and promised future efforts to increase the value
of Token-5, by, among other things, touting the experience of its team and developers in
public fora. Issuer-5’s white paper also detailed specific tasks that would be completed by its
team, and explained that the funds from the offering would be used to develop its platform,
including developing a mobile app, licensing the company’s services in the U.S. and overseas,
developing content for the platform, and marketing the company.
d. Issuer-5 emphasized to potential investors that Token-5 would be traded on
digital asset trading platforms shortly after the end of ICO-5, including stating in its public
messaging forum that “there is a lot of room with price speculation.”
190. Before and at the time of ICO-6 for Token-6:
a. Issuer-6 led prospective investors to reasonably expect profits based on the
efforts of others by, among other things, touting the profit potential of Token-6 in public
statements to potential investors. In its white paper, Issuer-6 emphasized that the finite
number of tokens would naturally lead to investor profits: “as the crypto token network
grows, there are more people circulating the crypto token, and the market forces of supply
and demand cause the value of the crypto token to rise.” Issuer-6 also emphasized the
specific milestones the company hoped to achieve, as detailed in paragraph 190(c) below.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 38 of 55
39. 39
b. Investor assets were pooled to fund Issuer-6’s business model, and Issuer-6
disclosed that it had retained 20% of all tokens for the company.
c. Issuer-6 touted its ongoing and promised future efforts to increase the value
of Token-6, by, among other things, touting the experience of its team and developers in its
white paper. The ICO-6 white paper also contained a roadmap detailing specific milestones
that the company hoped to achieve in the year following the token sale, including a “design
phase” for the platform, development of the actual platform, and testing the product.
d. In its white paper, Issuer-6 explained that the funds collected in the token
sale would be used to “fund [the company’s] development,” including the recruitment of
software developers and hiring of a “growth marketer” to promote Issuer-6.
e. Comments from investors in public fora made clear that these offering
participants expected to profit from holding Token-6.
191. Before and at the time of ICO-7 for Token-7:
a. Issuer-7 led prospective investors to reasonably expect profits based on the
efforts of others by, among other things, touting the profit potential of Token-7 in public
statements to potential investors. In the ICO-7 white paper Issuer-7 explained that “[t]he
total number of tokens is strictly limited by the initial issue. Therefore, a deflationary
economic model has been created within the framework of the platform. It provides an
increase in the value of tokens over time.” The company also claimed that “[w]e can’t sleep
until we make our investors rich.”
b. Investor assets were pooled to fund Issuer-7’s business model and Issuer-7
disclosed that it had retained 10% of all tokens for the company.
c. Issuer-7 touted its ongoing and promised future efforts to increase the value
of Token-7, by, among other things, touting the expertise of its team and the support of its
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 39 of 55
40. 40
“legendary advisers” as being critical to the company’s success. Issuer-7’s white paper also
detailed discrete tasks that would be completed by its team, and explained that the funds
from the offering would be used to develop the Token-7 platform; create “viral content”
relating to the platform; and market the product.
192. Before and at the time of ICO-8 for Token-8:
a. Issuer-8 led prospective investors to reasonably expect profits based on the
efforts of others by, among other things, touting the profit potential of Token-8 in public
statements. In its white paper, Issuer-8 answered the question of “[w]hy would someone
invest in [ICO-8]?” by stating that Token-8 would have “great appeal for: Long-term
holders. Those who wish to buy and hold [Token-8] for any potential future value.”
b. Investor assets were pooled to fund Issuer-8’s business model, and Issuer-8
disclosed that it had retained 20 million tokens for the company.
c. Issuer-8 touted its ongoing and promised future efforts to increase the value
of Token-8, by, among other things, detailing various milestones the company hoped to
achieve, including integration of a global SMS message system to the app; international
promotion of the product; global translation of the app; and development of a “GUI CPU
miner.” The ICO-8 white paper further explained that “[a] team will be concurrently
building the virtual currency exchange app . . .” Comments from investors in public fora
made clear that they were relying on Issuer-8 to undertake efforts to further develop the
platform and thereby increase the price of Token-8.
d. At the time of ICO-8, the platform for which Issuer-8 stated it was raising
funds in ICO-8 to develop was still in development. Issuer-8 explained that “we are raising
money in this token sale for a more ambitious plan,” with the “scope of our long terms goals
. . . largely defined by the funds raised in the crowdfunding token sale.”
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 40 of 55
41. 41
e. Issuer-8 emphasized to potential investors that Token-8 would be traded on
digital asset trading platforms shortly after the end of ICO-8, including stating in its white
paper that “[w]e are allowing people a chance to purchase [Token-8] in advance of it being
listed on the various exchanges.” The company further explained that Token-8 would be
available to token sale participants—whom the company described as “investors”—before
they were made available to the general public.
193. Moreover, before and at the time of each of the seven Touted ICOs and the ICO for
Token-8, there was no consumptive “use” for any of the eight tokens being offered in the particular
ICOs, and the platforms for which the eight issuers stated they were raising funds to develop had
not been developed or were still in development.
194. McAfee acted knowingly, or at the least recklessly, in connection with the conduct
set forth above, and also acted negligently, by failing to use the degree of care in this conduct that a
reasonably careful person would use under like circumstances.
195. Watson acted knowingly, or at the least recklessly, in connection with the conduct set
forth above, and also acted negligently, by failing to use the degree of care in this conduct that a
reasonably careful person would use under like circumstances.
FIRST CLAIM FOR RELIEF
Violations of Section 17(b) of the Securities Act
(Against McAfee)
196. The Commission realleges and incorporates by reference here the allegations in
paragraphs 1 through 194.
197. By engaging in the acts and conduct described in this Complaint, Defendant McAfee
made use of the means and instruments of transportation or communication in interstate commerce
or of the mails to publish, give publicity to, or circulate a notice, circular, advertisement, newspaper,
article, letter, investment service, or communication which, though not purporting to offer securities
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 41 of 55
42. 42
(the digital asset securities Tokens-1 through 7) for sale, described such securities for a consideration
received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully
disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.
198. McAfee (acting individually and/or through his agents) violated Section 17(b) of the
Securities Act by, among other things, directly or indirectly, publishing communications on Twitter
and other publicly available fora, describing Tokens-1 through 7, all digital asset securities, in
exchange for compensation in the form of various digital assets, without fully disclosing the past
and/or intended receipt of such consideration and the amount thereof.
199. By reason of the conduct described above, McAfee violated and, unless enjoined will
again violate, Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)].
SECOND CLAIM FOR RELIEF
Violations of Section 17(a)(1) and (3) of the Securities Act
(Against McAfee and Watson)
200. The Commission realleges and incorporates by reference here the allegations in
paragraphs 1 through 195.
201. By engaging in the acts and conduct described in this Complaint, Defendants
McAfee and Watson, directly or indirectly, singly or in concert, in the offer or sale of securities (the
digital asset securities Tokens-1 through 8), and by the use of the means or instruments of
transportation or communication in interstate commerce or the mails, (1) knowingly or recklessly
employed one or more devices, schemes or artifices to defraud, and/or (2) knowingly, recklessly, or
negligently engaged in one or more transactions, practices, or courses of business which operated or
would operate as a fraud or deceit upon the purchaser.
202. McAfee (acting individually and/or through his agents) violated Sections 17(a)(1) and
(a)(3) of the Securities Act by, among other things, directly or indirectly, with scienter: taking
affirmative steps to conceal, and/or deceive investors respecting, his receipt of compensation for his
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 42 of 55
43. 43
promotional communications regarding the digital asset securities offered and sold in ICOs-1
through 7; directing and overseeing the work of his agents to coordinate and carry out the
promotional campaigns; and directing certain issuers of the digital assets securities offered and sold
in ICOs-1 through 7 to mislead, and himself misleading, the public about his involvement with such
issuers. McAfee’s intentional or reckless failure to make timely and appropriate disclosure of the
compensation he was receiving for making promotional communications with respect to ICOs-1
through 7, as well as his intentional or reckless misstatements about the nature of his involvement
with certain issuers of such securities, the reasons he was promoting certain such securities, and the
nature of his own investments into such securities, violated Sections 17(a)(1) and (a)(3) of the
Securities Act as material misstatements and omissions that facilitated McAfee’s scheme to deceive
investors about his compensation for promoting the digital asset securities offered and sold with
respect to ICOs-1 through 7, and/or to fraudulently induce investors to purchase the digital asset
securities being offered in ICOs-1 through 7. McAfee also violated Section 17(a)(3) of the Securities
Act by failing to use the degree of care in this conduct that a reasonably careful person would use
under like circumstances. With respect to the digital asset securities Token-1 and Token-2, McAfee
further violated Sections 17(a)(1) and (a)(3) of the Securities Act by engaging others to make public
statements about such securities designed to facilitate McAfee’s and others’ sales into the market of
such securities at higher prices, and by himself making such sales into the market. McAfee also
violated Section 17(a)(3) of the Securities Act by failing to use the degree of care in this conduct that
a reasonably careful person would use under like circumstances. With respect to the digital asset
security Token-8, McAfee further violated Sections 17(a)(1) and (a)(3) of the Securities Act by
knowingly or recklessly purchasing, or directing others to purchase, such security for his own
account prior to recommending or touting that very security to others, while not disclosing the full
details of his ownership of Token-8 and his plans to sell it, and selling Token-8 following the tout’s
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 43 of 55
44. 44
dissemination and into the share price and trading volume increases triggered by the tout. McAfee
also violated Section 17(a)(3) of the Securities Act by failing to use the degree of care in this conduct
that a reasonably careful person would use under like circumstances.
203. Watson, pursuant to a tacit or explicit agreement with McAfee, violated Sections
17(a)(1) and (a)(3) of the Securities Act by, knowingly or recklessly, among other things, directly or
indirectly, with scienter: taking affirmative steps to conceal, and/or deceive investors respecting,
McAfee’s receipt of compensation for McAfee’s promotional communications regarding the digital
asset securities offered and sold in ICOs-1 and 3 through 7; directing certain issuers of the digital
assets securities offered and sold in ICOs-1 and 3 through 7 to mislead the public about his
involvement with such issuers; directing others to issue public statements intended to create the false
appearance of interest in certain such securities; identifying potential digital asset securities that
could become a part of the ICO promotional scheme; and communicating with and directing the
issuers of the digital asset securities offered and sold in ICOs-1 and 3 through 7, respecting such
scheme. Watson also violated Section 17(a)(3) of the Securities Act by failing to use the degree of
care in this conduct that a reasonably careful person would use under like circumstances. Watson
also violated Section 17(a)(3) of the Securities Act by failing to use the degree of care in this conduct
that a reasonably careful person would use under like circumstances. With respect to the digital asset
security Token-8, Watson further violated Sections 17(a)(1) and (a)(3) of the Securities Act by
knowingly or recklessly identifying such security for McAfee’s account prior to taking steps to
procure the touting of that very security to others, while not disclosing the full details of McAfee’s
ownership of Token-8 and his plans to sell it, and taking steps to procure McAfee selling Token-8
following the tout’s dissemination and into the share price and trading volume increases triggered by
the tout. Watson also violated Section 17(a)(3) of the Securities Act by failing to use the degree of
care in this conduct that a reasonably careful person would use under like circumstances.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 44 of 55
45. 45
204. By reason of the foregoing, Defendants McAfee and Watson, directly or indirectly,
singly or in concert, have violated and, unless enjoined, will again violate Securities Act Section
17(a)(1) and (3) [15 U.S.C. § 77q(a)(1) and (3)].
THIRD CLAIM FOR RELIEF
Violations Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) Thereunder
(Against McAfee and Watson)
205. The Commission realleges and incorporates by reference here the allegations in
paragraphs 1 through 195.
206. By engaging in the acts and conduct described in this Complaint, Defendants
McAfee and Watson, directly or indirectly, singly or in concert, in connection with the purchase or
sale of securities, the digital asset securities Tokens-1 through 8, and by the use of means or
instrumentalities of interstate commerce, or the mails, or the facilities of a national securities
exchange, knowingly or recklessly (1) employed one or more devices, schemes, or artifices to
defraud, and/or (2) engaged in one or more acts, practices, or courses of business which operated or
would operate as a fraud or deceit upon other persons.
207. McAfee (acting individually and/or through his agents) violated Section 10b-5 of the
Exchange Act, and Rules 10b-5(a) and (c) thereunder, by, among other things, directly or indirectly:
taking affirmative steps to conceal, and/or deceive investors respecting, his receipt of compensation
for his promotional communications regarding the digital asset securities offered and sold in ICOs-1
through 7; and directing certain issuers of the digital assets securities offered and sold in ICOs-1
through 7 to mislead, and himself misleading, the public about his involvement with such issuers.
McAfee’s intentional or reckless failure to make timely and appropriate disclosure of the
compensation he was receiving for making promotional communications with respect to ICOs-1
through 7, as well as his intentional or reckless misstatements about the nature of his involvement
with certain issuers of such securities, the reasons he was promoting certain such securities, and the
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 45 of 55
46. 46
nature of his own investments into such securities, violated Section 10b-5 of the Exchange Act, and
Rules 10b-5(a) and (c) thereunder, as material misstatements and omissions that facilitated McAfee’s
scheme to deceive investors about his compensation for promoting the digital asset securities
offered and sold with respect to ICOs-1 through 7, and/or to fraudulently induce investors to
purchase the digital asset securities being offered in ICOs-1 through 7. With respect to the digital
asset securities Token-1 and Token-2, McAfee further violated Section 10b-5 of the Exchange Act,
and Rules 10b-5(a) and (c) thereunder, by knowingly or recklessly engaging others to make public
statements about such securities designed to facilitate McAfee’s and others’ sales into the market of
such securities at higher prices, and by himself making such sales into the market. With respect to
the digital asset security Token-8, McAfee further violated Section 10b-5 of the Exchange Act, and
Rules 10b-5(a) and (c) thereunder, by knowingly or recklessly purchasing, or directing others to
purchase, such security for his own account prior to recommending or touting that very security to
others, while not disclosing the full details of his ownership of Token-8 and his plans to sell it, and
selling Token-8 following the tout’s dissemination and into the share price and trading volume
increases triggered by the tout.
208. Watson, pursuant to a tacit or illicit agreement with McAfee, violated Section 10b-5
of the Exchange Act, and Rules 10b-5(a) and (c) thereunder by, among other things, directly or
indirectly, with scienter: taking affirmative steps to conceal, and/or deceive investors respecting,
McAfee’s receipt of compensation for McAfee’s promotional communications regarding the digital
asset securities offered and sold in ICOs-1 and 3 through 7; directing certain issuers of the digital
assets securities offered and sold in ICOs-1 and 3 through 7 to mislead the public about his
involvement with such issuers; directing others to issue public statements intended to create the false
appearance of interest in certain such securities; identifying potential digital asset securities, and the
issuers of such securities, that could become a part of the ICO promotional scheme; and
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 46 of 55
47. 47
communicating with and directing the issuers of the digital asset securities offered and sold in ICOs-
1 and 3 through 7, respecting such scheme. With respect to the digital asset security Token-8,
Watson further violated Section 10b-5 of the Exchange Act, and Rules 10b-5(a) and (c) thereunder
by knowingly or recklessly identifying then purchasing such security for McAfee’s account prior to
taking steps to procure the touting of that very security to others, while not disclosing the full details
of McAfee’s ownership of Token-8 and his plans to sell it, and taking steps to procure McAfee
selling Token-8 following the tout’s dissemination and into the share price and trading volume
increases triggered by the tout.
209. By reason of the foregoing, McAfee and Watson, directly or indirectly, singly or in
concert, has violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C.
§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5(a) and (c)].
FOURTH CLAIM FOR RELIEF
Violations of Section 17(a)(2) of the Securities Act
(Against McAfee)
210. The Commission realleges and incorporates by reference here the allegations in
paragraphs 1 through 194.
211. McAfee, directly or indirectly, singly or in concert, in the offer or sale of securities,
the digital asset securities Tokens-1 through 8, and by the use of the means or instruments of
transportation or communication in interstate commerce or the mails, knowingly, recklessly, or
negligently obtained money or property by means of one or more untrue statements of a material
fact or omissions of a material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
212. McAfee violated Section 17(a)(2) of the Securities Act by, among other things,
knowingly, recklessly, or negligently making material misstatements, in public fora such as Twitter
and others, regarding the reasons and sources for his promotions of certain ICOs (including that he
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 47 of 55
48. 48
had “scoured” or “sift[ed]” through other tokens to recommend certain ICOs), his supposed
involvement with the issuers of such ICOs (including that he was a “friend” of or “adviser” to the
issuers of certain ICOs), his investments in the digital assets securities being offered and sold in such
ICOs (including that he had invested in certain of the ICOs), and the amount and extent of his
compensation the issuers of such ICOs had paid him to promote such ICOs (including that he was
not being paid to promote the ICOs), and omitted to disclose material information regarding the
amount and extent of compensation the issuers of the ICOs for Tokens-1 through 7 had paid him in
exchange for promotional materials. With respect to the digital asset security Token-8, McAfee
further violated Section 17(a)(2) of the Securities Act by, among other things, knowingly or
recklessly making material misstatements and omissions, in public fora such as Twitter and others,
regarding his holdings of Token-8 and his intent to sell his holdings of Token-8 following the tokens
price appreciation he expected to be caused by his promotion of the token.
213. By reason of the foregoing, McAfee, directly or indirectly, singly or in concert,
violated and, unless enjoined, will again violate Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)].
FIFTH CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) Thereunder
(Against McAfee)
214. The Commission realleges and incorporates by reference here the allegations in
paragraphs 1 through 194.
215. McAfee, directly or indirectly, singly or in concert, in connection with the purchase
or sale of securities, the digital asset securities Tokens-1 through 8, and by the use of means or
instrumentalities of interstate commerce, or the mails, or the facilities of a national securities
exchange, knowingly or recklessly made one or more untrue statements of a material fact or omitted
to state one or more material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
Case 1:20-cv-08281 Document 1 Filed 10/05/20 Page 48 of 55