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SafeMoon Executives Charged in US with Fraud Related to Crypto Token

SafeMoon’s founder and top executives face U.S. DOJ charges of running a fraud diverting investor funds for personal luxury. SEC files related civil charges.

Key Takeaways

  • SafeMoon founder and top executives face charges of securities fraud, wire fraud, and money laundering.
  • The U.S. Securities and Exchange Commission also files civil charges against SafeMoon.
  • SafeMoon allegedly misled investors with false promises of the security of their investments.
  • The token’s value plummeted after investors learned about the alleged fraud.

The founder and two top executives of SafeMoon, a cryptocurrency token once valued at over $8 billion, are now facing charges from the U.S. Department of Justice. The charges are related to their alleged involvement in a fraud scheme that redirected tens of millions of investor dollars towards personal luxuries.

SEC On Their Way

An indictment revealed in Brooklyn on Wednesday named the accused individuals as founder Kyle Nagy, 35; Chief Executive Braden John Karony, 27; and former Chief Technology Officer Thomas Smith, 35. Each of them faces three criminal counts, including conspiring to commit securities fraud, wire fraud, and money laundering.

The U.S. Securities and Exchange Commission (SEC) has also taken legal action against these individuals, citing their involvement in SafeMoon’s unregistered sale of the token.

SafeMoon, established in March 2021 with the issuance of 1 quadrillion tokens, is accused of deceiving investors by falsely assuring them that their investments were securely locked in liquidity pools and couldn’t be accessed. The token was also marketed as having features that would drive its price to all-time highs, promising to take investors “Safely to the Moon.”

Contrary to these claims, investigations revealed that the liquidity pool was not locked, resulting in significant losses for investors. Meanwhile, the accused executives reportedly withdrew funds to purchase luxury vehicles, including McLaren and Porsche sports cars, as well as expensive travel and luxury homes.

Ivan Arvelo, the agent in charge of Homeland Security Investigations in New York, described the alleged actions as “insatiable greed.”

$50 Million In Reduction

One notable quote from the indictment attributed to Thomas Smith was, “BRO WE DID IT,” as he discussed acquiring luxury vehicles after selling tokens connected to the liquidity pool.

Following the announcement of these charges, SafeMoon’s valuation plummeted by over 50%, reducing its worth to approximately $50 million, according to CoinMarketCap data.

While Karony and Smith have been arrested in Provo, Utah, and Bethlehem, New Hampshire, respectively, Kyle Nagy remains at large.

SEC Chair Gary Gensler has previously emphasized the need to address speculative excesses in the cryptocurrency market to maintain investor trust in U.S. capital markets.

To Conclude

This case underscores the importance of regulatory oversight in the cryptocurrency space. The charges against SafeMoon’s leadership highlight the risks associated with investing in tokens that lack proper transparency and regulatory compliance. It serves as a reminder that the cryptocurrency industry needs to prioritize accountability and investor protection to foster trust and long-term sustainability.