A Dallas, Texas man has been penalized by the Commodity Futures Trading Commission (CFTC) for his role in a “pump-and-dump” scheme involving digital assets. Jimmy Gale Watson was subject to a consent order entered by the U.S. District Court for the Southern District of New York on July 14, 2022.
The CFTC originally filed charges against Watson and John David McAfee on March 5, 2021, alleging a manipulative scheme designed to artificially inflate the price of certain digital assets before selling them for profit. Watson assisted in selecting the digital assets targeted by the scheme and secretly accumulated positions in them prior to promotional campaigns.
According to the court order, Watson and his co-conspirators used misleading social media endorsements to “pump” the value of the assets, creating artificial demand. They concealed their existing holdings and intent to sell, then “dumped” their positions as prices rose due to the deceptive touting. This allowed them to profit from the inflated prices at the expense of other investors.
The consent order requires Watson to disgorge $146,000 in ill-gotten gains and pay an equal amount as a civil monetary penalty, totaling $292,000. He is also permanently prohibited from violating the Commodity Exchange Act (CEA) and CFTC regulations, and is subject to registration and trading bans.
“The CFTC will continue actively to use its enforcement authority in the digital asset space to combat fraud and manipulation,” stated Gretchen Lowe, Acting Director of Enforcement for the CFTC. The investigation was conducted in parallel with investigations by the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Securities and Exchange Commission.
David M. Oakland, Christopher Giglio, Alejandra de Urioste, K. Brent Tomer, Lenel Hickson, Jr., Manal M. Sultan, and former Enforcement staff member Gates Hurand of the CFTC’s Division of Enforcement were responsible for the case, with assistance from the Digital Assets Task Force.
Source: CFTC.gov
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