The U.S. Department of Justice has charged SafeMoon executives Braden John, Karony, Me Nagy, and Thomas Smith with securities fraud, wire fraud, and money laundering.
Prosecutors reported the arrest of Karony in Provo, Utah, and Smith in Bethlehem, New Hampshire, while Nagy remains at large.
These arrests coincide with the SEC’s announcement of civil charges against SafeMoon and its executives, alleging their involvement in a large-scale fraudulent scheme that cost investors billions of dollars.
SafeMoon, introduced in March 2021, gained popularity among investors due to its business model, which distributed half of the profits from its 10% transaction fee to token holders.
CoinGecko reported SafeMoon’s price reaching a high of $0.00338272 in January 2022, an increase of over 23,000% since launch.
However, the price has significantly declined since the DOJ’s indictment and the SEC’s civil charges, falling to $0.00019274.
The indictment accuses the defendants of “lying to SFM investors regarding whether SFM’s use of ‘locked’ liquidity was inaccessible to the defendants, as well as their holding and trading of SFM.”
Despite SafeMoon’s growth to a market capitalization exceeding $8 billion, the DOJ alleges that its executives “fraudulently diverted and misappropriated millions of dollars’ worth of purportedly ‘locked’ SFM liquidity for their benefit.”
Federal prosecutors claim these benefits included “the purchase of luxury vehicles, real estate, and personal investments.“
The indictment further alleges that one of the accused, Smith, used the money obtained from the alleged scheme to purchase a customized Porsche 911 sports car valued at $860,000.
U.S Attorney Breon Peace stated in a press release “As alleged, the defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles, and real estate,”
According to the DOJ, the accused individuals employed sophisticated transaction routing and pseudonymous exchange accounts to conceal their actions.
Karony was arrested in Utah, and Smith was arrested in New Hampshire on the same day, while Nagy remains a fugitive.
If found guilty, the defendants could face up to 25 years in prison. Karony, Nagy, and Smith have not publicly commented on the charges.
The SEC and DOJ are continuing their investigations into SafeMoon, and investors are advised to exercise caution when investing in cryptocurrencies.
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