News came Wednesday evening that cybersecurity pioneer John McAfee was found dead in a Spanish jail. While shocking, it is not surprising. Here is what FIN wrote about McAfee back in March:
John McAfee Indicted for Crypto Pump-and-Dump
It’s hard to think of a modern reputational downfall more vertiginous or more grotesque than John McAfee’s; his life story is like Bernie Madoff as scripted by Hieronymous Bosch and Warren Zevon.
McAfee, once a NASA employee and cocaine dealer, created the most influential cybersecurity program of the early Internet era, which continued to bear his name long after he left, and sold his interest in, the company he founded in 1987. He resented his personal association with this success; after Intel bought the company and changed its name, he told the BBC: “I am now everlastingly grateful to Intel for freeing me from this terrible association with the worst software on the planet.”
On Twitter McAfee boasts of sexual conquests and his admiration for prostitutes. He claims to use body doubles to confuse whoever might be pursuing him. In a spellbinding 2012 Wired article, McAfee held a Smith & Wesson pistol with one bullet in the chamber to his head in front of the writer and pulled the trigger—repeatedly. McAfee fled his multiacre Belize compound, filled with crocodiles and howler monkeys, in 2012 having been investigated for the murder of a neighbor; he had to pay a $25 million wrongful death fee to the dead man’s family but was never charged with the crime. The US Justice Department indicted McAfee in June 2020 for tax evasion and he has been in a prison in Spain since October.
On Friday March 5, the US Attorney for the Southern District of New York indicted McAfee again; the final act of the 21st century scoundrel, it seems, is cryptocurrency market manipulation. (Surprisingly, as of Sunday morning, neither The New York Times nor the Wall Street Journal had covered the latest chapter of this extraordinary tale.)
The indictment is a devastating account of repeated, deliberate, and crude market manipulation. It’s simple at its core: McAfee instructed a team of people to buy up large quantities of second- and third-tier cryptocurrencies; he then tweeted about their virtues, with notes like this:
The markets for these coins were usually so small that McAfee’s tweets would cause the price to spurt upward. McAfee’s associates would then sell, and the prices would plunge. Much of this was publicly noticed at the time, but McAfee would vehemently deny that he had any interest. Toward the end of 2017, McAfee launched a Coin of the Day (later Coin of the Week) feature on his Twitter feed; each time he publicized a coin, he’d bought an interest in it. The case against McAfee seems incredibly strong, because prosecutors have the cooperation of just about everyone who was working with him, in exchange for lenient treatment. Their accounts are also backed up with numerous text messages.
What makes all of this a story much bigger that McAfee’s latest outrage is that McAfee’s indictable tweets don’t differ very much from a huge swath of what happens on cryptotwitter every day. (This world is related to, but slightly different from the reddit community that brought us the GameStop Gotterdamerung.) There are hundreds of such tout tweets every day, from people who aren’t known outside that world and people who are, such as Elon Musk and Gene Simmons.
So are all those people breaking the law, as McAfee did? There are potentially critical differences that depend on intent, and if you pay close attention to these tweets you will see how savvy people cover their butts. They will put into their Twitter profiles that what they say doesn’t constitute investment advice, for example. And what seems to have really angered regulators and prosecutors was McAfee’s repeated claims that he didn’t have an interest when he actually did. Apparently, if someone on Twitter gooses the price of a cryptocurrency by explicitly telling readers that they have just bought X amount of Y currency and it going to rocket to the moon, that’s probably legal.