New York, November 1, 2023 – The founder and two top executives at SafeMoon, whose eponymous cryptocurrency token was once valued at more than $8 billion, now find themselves facing charges brought by the U.S. Department of Justice for orchestrating a fraudulent scheme that diverted tens of millions of investor dollars to fund their lavish lifestyles.
An indictment unsealed on Wednesday in Brooklyn has brought criminal charges against founder Kyle Nagy, 35; Chief Executive Braden John Karony, 27; and former Chief Technology Officer Thomas Smith, 35. Each of them is charged with three criminal counts related to conspiring to commit securities fraud, wire fraud, and money laundering.
The U.S. Securities and Exchange Commission (SEC) has also filed civil charges against these individuals concerning SafeMoon’s alleged unregistered sale of its token.
At the time of reporting, there has been no immediate response from legal representatives for SafeMoon or the individual defendants.
SafeMoon, minted in March 2021 with a staggering 1 quadrillion tokens, stands accused of deceiving investors by falsely claiming that their investments were securely locked in pools to enhance the token’s liquidity, rendering them inaccessible to any party.
According to court documents, SafeMoon further assured investors that the token’s unique features would propel its price to unprecedented heights, promising to take them “Safely to the Moon.”
Contrary to these assurances, investigators have disclosed that investors experienced substantial losses when they discovered that the pool was not, in fact, locked. Meanwhile, the accused individuals allegedly withdrew funds to finance the purchase of luxury cars, including McLaren and Porsche sports vehicles, extravagant travel, and opulent residences.
Homeland Security Investigations in New York, represented by Ivan Arvelo, described this situation as a result of “insatiable greed.”
The indictment includes a statement attributed to Thomas Smith, who, upon discussing the acquisition of luxury vehicles following the sale of tokens associated with the liquidity pool, was quoted as saying, “BRO WE DID IT.”
As a consequence of the charges, SafeMoon’s valuation plummeted to approximately $50 million on Wednesday afternoon, suffering a decline of over 50% after the news broke, according to data from CoinMarketCap.
Braden John Karony was taken into custody in Provo, while Thomas Smith was arrested in Bethlehem, New Hampshire. Meanwhile, Kyle Nagy remains at large.
The Chair of the SEC, Gary Gensler, has previously expressed concerns about speculative excesses in the cryptocurrency space, suggesting that they undermine investor trust in U.S. capital markets.
