For First Time, CFTC Cracks Down on Crypto’s ‘Pump-and-dump’ Schemes

The CFTC first charged McAfee and Watson in March 2021


Commodity Futures Trading Commission | Source: Shutterstock


key takeaways

  • CFTC charged Jimmy Gale Watson, Jr., an associate of the late John McAfee, $144,736
  • The scheme resulted in profits in excess of $2 million, the CFTC alleged in the complaint

The Commodity Futures Trading Commission (CFTC) for the first time cracked down on a so-called “pump-and-dump” crypto scheme Monday. 

A New York judge ordered Jimmy Gale Watson, Jr., an associate of the late John McAfee, to pay $144,736 in ill-gotten gains he allegedly received from the scheme. 

Watson was an “executive advisor” to McAfee, who was an entrepreneur in the crypto space. 

Watson is also permanently banned from trading derivatives, as well as registering with the CFTC — a requisite of certain types of institutional investing.

“Ensuring appropriate customer protections and enforcing against fraudulent schemes like this one are core principles deeply embedded in the agency’s legal and regulatory framework, history, and ethos,” the CFTC said in a statement. “Such fraudulent and manipulative schemes are particularly egregious when they target the most vulnerable market participants, here hardworking retail investors.”

The CFTC first charged McAfee and Watson in March 2021. The CFTC alleged the two secretly accumulated positions in digital assets and deceptively promoted the tokens on social media as valuable long-term investments — before selling for a substantial profit. 

The grift resulted in profits in excess of $2 million, the CFTC claimed in the complaint. The fraud involved tokens, including verge (XVG), dogecoin (DOGE) and reddcoin (RDD).

Last Thursday, the SEC separately won a judgment against Watson for his role in McAfee’s alleged initial coin offering (ICO). Watson was fined $375,000 for his alleged participation. 

In 2020, the SEC alleged that Watson and McAfee promoted investments in the ICO without disclosing that they were compensated for doing so.

Watson is now also banned permanently from participating, directly or indirectly, in the issuance, purchase, offer or sale of any digital asset deemed a security — a still very-much evolving classification. 


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Frax report cover.jpg


Frax saw continued development in its frxETH liquid staking derivative and Fraxlend money market throughout 2023. Frax V3 introduces an RWA strategy to drive utility to the protocol's cornerstone product, the FRAX stablecoin.


Accredited and non-accredited investors worldwide will be able to purchase the Note starting Dec. 6 on US-regulated trading platform INX


Bitcoin’s next halving is less than five months away. History says they’re bullish but will this time be different?


Merger is set to allow the combined business to “flex between our different lines of business,” Hut 8 CEO says


Agency’s decision to start comment window earlier than expected could be bullish for spot bitcoin ETF approval in January, industry watchers say


Jump Crypto is the trading firm at the center of Terra-related market manipulation allegations


Funds tied to Coinbase co-founder Fred Ehrsam have made the most of the COIN rollercoaster