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SafeMoon (SFM) Founders Arrested, Face U.S. Charges for Defrauding Investors

News The U.S. Attorney's Office for the Eastern District of New York has unveiled a significant indictment, implicating Braden John Karony, Kyle Nagy, and Thomas Smith in a multifaceted financial fraud case. The charges against them encompass conspiracy to commit securities fraud, conspiracy to commit wire fraud, and money laundering conspiracy. The alleged misconduct revolves
SafeMoon (SFM) Founders Arrested, Face U.S. Charges for Defrauding Investors
The U.S. Attorney’s Office for the Eastern District of New York has unveiled a significant indictment, implicating Braden John Karony, Kyle Nagy, and Thomas Smith in a multifaceted financial fraud case. The charges against them encompass conspiracy to commit securities fraud, conspiracy to commit wire fraud, and money laundering conspiracy. The alleged misconduct revolves around their involvement in a digital asset called “SafeMoon” (SFM), which was offered through their company, SafeMoon LLC.

The indictment contends that the defendants misled SFM investors regarding the accessibility of ‘locked’ liquidity and their involvement in SFM. As SFM’s market capitalization surged beyond $8 billion, the defendants purportedly diverted and misappropriated millions of dollars from the supposedly “locked” SFM liquidity for their gain. Two of the accused, Karony and Smith, have been arrested, while Nagy remains at large.

Breon Peace, the United States Attorney for the Eastern District of New York, emphasized the deliberate deception and the defendants’ extravagant expenditures, which included luxury vehicles, real estate, and personal investments. This case highlights the increasing use of digital assets for fraudulent activities, and the authorities are committed to pursuing those who exploit investors in this domain.

The investigation benefited from the assistance of the U.S. Securities and Exchange Commission, reinforcing the commitment to holding fraudsters accountable. According to Ivan J. Arvelo, Special Agent in Charge of Homeland Security Investigations in New York, the defendants’ unbridled greed led them to divert millions of dollars for personal indulgence, and they will face the consequences of their actions.

The Internal Revenue Service Criminal Investigation’s Cyber and J5 groups, in collaboration with other investigative partners, meticulously tracked the diverted funds and arrested the culprits involved in this complex financial fraud scheme.

SafeMoon tokens, introduced by SafeMoon LLC in March 2021, were subject to a 10% tax on every transaction, with the proceeds divided into two 5% tranches. The first tranche was meant to benefit SFM holders, while the second was designated for liquidity pools. SFM rapidly gained over one million holders and an $8 billion market capitalization.

The defendants allegedly misrepresented key aspects of the SFM offering, including the security of locked liquidity pools and their involvement with SFM. In reality, they retained access to these pools, diverting and misappropriating millions of tokens for their benefit. They also engaged in personal SFM trading, generating substantial profits. To obscure their actions, the defendants used private crypto wallets, intricate transaction routing, and pseudonymous exchange accounts, using the ill-gotten gains to purchase luxury vehicles and real estate.

It’s essential to remember that the charges in the indictment are allegations, and the defendants are considered innocent unless proven guilty. The prosecution is being managed by the Office’s Business and Securities Fraud Section, led by Assistant United States Attorneys Drew G. Rolle, Matthew R. Galeotti, and John O. Enright, with support from Paralegal Specialist Jacob Menz.

The defendants in this case are:

Braden John Karony (also known as “John Karony” and “CPT HODL T MUN”), aged 27, from Provo, Utah.

Kyle Nagy (also known as “Safemoon Dev”), aged 35, from Vero Beach, Florida.

Thomas Smith (also known as “papa”), aged 35, from Bethlehem, New Hampshire.

This case is registered as E.D.N.Y. Docket No. 23-CR-433.

Wasif Shakir

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