MGT Capital Investments, a bitcoin mining and cryptocurrency investing firm formerly associated with John McAfee, has been hit with a class-action lawsuit over allegations that its former CEO participated in a pump-and-dump scheme that manipulated the price of MGT shares.
The accusation, which was filed by Rosen law firm, made by the present and former MGT shareholders who bought MGT securities between 2015 and 2018, followed procedures and the investigation discovered a stock-pumping scheme. Capital director Robert Ladd stepped down to the face the claim.
That pump-and-dump operation, consisted of a group of 10 investors and corporate executives including Ladd, former Riot Blockchain CEO John O’Rourke (who also tendered his resignation), and billionaire Phillip Frost, who allegedly conspired over a period of several years to generate more than $27 million in unlawful stock sales by manipulating the prices of penny stocks. Though not explicitly named in the SEC order, it is clear from the agency’s complaint that the pump-and-dump group used dishonest promotion and manipulative stock trading to drive up the price of MGT shares, enabling them to net more than $9.4 million during a period of just two weeks.
some of this alleged dishonest promotion was related to MGT’s acquisition of a company owned by an unnamed investor, almost certainly John McAfee. McAfee served as executive chairman and executive director of the chairman before his resignation in August 2017.
While McAfee was not named as a defendant in the complaint, he was listed as a defendant in a class action lawsuit.
The complaint claims that MGT and the other defendants have breached the Securities Exchange Act on four counts, all involving different parts of the pump and dump scheme.
the lawsuit requests this court order to pay compensation to shareholders affected by the manipulation of the shares, and pay the costs of the plaintiff ‘s services .MGT declared that they have “greatest confidence” that the suit is without merit. “This is not a departure from normal affairs in securities markets when share prices are down. Previous cases along a similar vein were thrown out without prejudice.”