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

The CFTC first charged McAfee and Watson in March 2021

article-image

Commodity Futures Trading Commission | Source: Shutterstock

share

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. 

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

REPORT_Template.png

Research

The Sonic blockchain is leveraging redesigned airdrop incentives and its FeeM program to propel DeFi activity and attract institutional capital, setting the stage for ecosystem growth. Within this environment, leading protocols Shadow Exchange and Silo are poised to asymmetrically benefit due to innovative features and favorable valuations, despite facing ecosystem dependency and competitive pressures. This positions them as compelling, potentially shorter-term, investment opportunities contingent on Sonic's sustained success.

article-image

Fineqia’s Matteo Greco says Circle’s targeting a valuation in line with market expectations to avoid a post-launch drop like Coinbase

article-image

The President’s son reportedly said his family may pursue legal action

article-image

One lets everyone see your trades. The other hides everything. Which design wins in crypto’s next perps arena?

article-image

Celebrating Bitcoin’s “zero to 1,000%” moment

article-image

K33 analyst Vetle Lunde warned of potential volatility ahead

article-image

The president wants Senators to hurry up and pass his sweeping tax and budget bill, as well as pro-crypto legislation