By November 24, 2016

Equibit: John McAfee joining Toronto-based blockchain security startup (McAfee: definitely not)

John McAfee

UPDATE: BetaKit has spoken with McAfee, who says Equibit is misrepresenting his role. See the end of the article. BetaKit has also reached out to Equibit CEO Chris Horlacher for comment.

McAfee and Associates founder John McAfee has joined a Toronto-based startup called Equibit as its Chief Security Officer, according to a report from VentureBeat.

Equibit Development Corporation (EDC) specializes in the safe issuing of shares and protecting trades from hacks. The startup also handles other client services such as voting and registering new stock owners through its decentralized blockchain technology.

EDC’s applications combine Bitcoin protocols with the company’s own blockchain, Equibit, to provide clients with a secure, peer-to-peer trading platform.

In an unusual arrangement, McAfee will be reporting directly to the board rather than the CEO. While McAfee founded McAfee and Associates in 1987, he left the company in 1994. The company was later sold to Intel for $7.68 billion.

“We’re honoured and thrilled to be working with John McAfee,” said Equibit CEO Chris Horlacher, who has an extensive background both in financial services management and entrepreneurship.

“With his input and ongoing guidance, EDC will continue to set the security standard for blockchain services. We share his unwavering commitment to IT security and, with his help, will continue to push the boundaries of what’s possible in this industry,” Horlacher said.

Horlacher said that McAfee’s primary role will be that of an internal auditor, adding that this is the reason he will be reporting to the board rather than the CEO in keeping with industry best practices. “He will be conducting regular penetration testing of our software and infrastructure. If he finds anything, EDC will, of course, move to remedy the situation as quickly as possible. We take our role as custodians of our user’s information and private keys very seriously,” said Horlacher.

McAfee is a surprising hire for more reasons than one. Since leaving McAfee and Associates, the entrepreneur has tried his hand at several startups. These include QuorumEx in 2010, a company focused on developing a new type of antibiotics, Future Tense in 2013 to create “D-Central,” a security network device, and Cognizant in 2014, an app that helps smartphone users understand what permissions they’ve granted to other apps.

“John has made no secret of his interest in Bitcoin and blockchain technology,” Horlacher said in a statement sent to BetaKit. “He’s building one of the largest mining operations in the world. I can’t speak for him, but I believe that he understands the business case for something like Equibit and the value it brings to the securities industry.”

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In addition to launching several startups since leaving McAfee and Associates, McAfee reportedly fled Belize after being investigated for his connection to a murder that took place in the country. He has also often been suspected of abundant drug use and accused of sexual assault in the past. Furthermore, he was a presidential candidate for the Libertarian party this past year, but lost the nomination to Gary Johnson.

“EDC is not in a position to comment on John’s personal and private history, however we find that the more sensational stories are severely lacking in evidence,” said Horlacher. “It is his dedication to IT security that we share and can find no one more competent in this facet of the industry to be advising us.”

McAfee currently runs an incubator and holds the role of CEO and executive chairman of the John McAfee Global Technologies investment fund.

“Equibit Development Corporation has positioned itself to become a major player in the blockchain development field focused on the financial sector,” said McAfee in a statement. “With my guidance and advice, I anticipate the company to experience stellar growth and achievements.”

This announcement comes just a few weeks after EDC launched a beta testing program for The Supernode — the first cryptocurrency node that performs all cryptographic operations (private key generation, encryption, decryption and digital signatures) in hardware rather than software.

As of February 2016, EDC had closed a financing round with a $3 million USD valuation. The offering had been open for less than two months.

UPDATE (4:53 P.M. EST, Sunday Nov 27th)

BetaKit has published a follow-up article here after extensive conversation with Equibit CEO Chris Horlacher.

UPDATE (2:32 P.M. EST)

BetaKit spoke on the phone with McAfee.

Why Equibit decided to call him CSO:

“Equibit contacted me two months ago and asked if I would be an adviser, and I said yes. And they said, we need pen testing help. And I said tell me what you need exactly, and I’ll find you someone. They never gave me specs they needed so I didn’t do it. They asked if they could call me CSO. I said you can call me whatever you want, call me the king as far as I’m concerned. But it makes no difference, what I’m doing is advising.”

“I’ve never asked money for advice or received money for advice. If they claimed they paid me, please ask them for a cheque stub. It hasn’t happened nor would it happen. Neither will I continue to work or advise with them, I think this is a very unsavoury move on their part.”

“I don’t care about titles; it makes no difference, but the formal relationship I have with Equibit is this. Call me for advice and I will give it to you. Last I heard from them was that they needed a pen tester, and I said ‘give me your specifications and I will find you one.’ They never called me. That was last time I had contact with them.”

Whether he would actually perform audits for the company, as Equibit CEO Chris Horlacher told BetaKit:

“I would be advising their board, absolutely. I advise boards of more companies than I can count. Yes, that part was true.”

“How could I do audits for them? I would have to go to Canada. I’d have to spend months there. It would take a team of people. Again, I have a full-time job. Which is more than a full-time job. It’s inconceivable and absurd to think I can actually do that [act as CSO]. And again for free!”

The extent of what his work would have been with Equibit:

“All I did was offer advice to the board; the board can call me, they could ask questions. It’s usually very trivial and takes a few seconds but absolutely at no point did I imply that I would be doing real work.”

Why he offered to advise Equibit:

“It’s a company in the security business that wants advice. If we do not pull together as a cybersecurity industry, we will collapse as a society. Cybersecurity is our weakest point, this is why I work with anybody.”

UPDATE (1:58 P.M. EST)

MobileSyrup was able to speak directly with John McAfee via Twitter:

“Like many companies who ask for my advice, I give it freely. Equibit wanted a more formal arrangement where they could call me from time to time for advice — the same as I do for everyone. they asked if they could title me Chief Security Officer. I told them they could title me “King” as far as I was concerned. At no time did they offer me money nor at any time did I ask for money. I have identical relationships with 31 companies around the world. In the past three months since they contacted me they have never called once for advice.

“I told them early on that if they needed a pen tester [penetration tester, ed.] I would try to find one for them. I am CEO of a public company in America. How on earth would I find the time to do pen testing for some other company. That’s a full-time job requiring many months.

“I will absolutely NOT continue any relationship whatsoever with Equibit. Further, if they claim I have been paid anything whatsoever, ask them to provide payment stubs. I never ask money for advice.”

UPDATE (1:37 P.M. EST):

John McAfee has posted to Twitter about his role at Equibit.

From John McAfee’s wife Janice McAfee:

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The original article was published on MobileSyrup. Additional files via MobileSyrup and BetaKit’s Jessica Galang.

Initial statement from McAfee has been edited for clarity and to correct obvious typos.

Feature image credit NullSession, article photo Gage Skidmore.

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