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ARTICLE · 10 MARCH 2021

CFTC Charges Individuals In Digital Asset Pump-and-Dump Scheme

Hogan Lovells Cadwalader
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The CFTC charged two individuals, including well-known technology entrepreneur John McAfee, with engaging in a "pump-and-dump" scheme involving digital assets.

United StatesFinance and Banking
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The CFTC charged two individuals, including well-known technology entrepreneur John McAfee, with engaging in a "pump-and-dump" scheme involving digital assets. It is the first ever enforcement action for a manipulative scheme involving digital assets.

In a Complaint filed in the U.S. District Court for the Southern District of New York, the CFTC alleged that the individuals deceptively touted several digital assets as "valuable long-term investment(s)" on social media. In anticipation of sharp price increases in the assets, the individuals secretly accumulated positions in the assets. Following a price spike resulting from one of the individuals' endorsements of the assets, the individuals secretly sold off the majority of their holdings in the assets and made profits in excess of $2 million.

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