Judge Delivers Verdict in SafeMoon Fraud Trial
On Wednesday afternoon, May 21, 2025, in a stark courtroom in Brooklyn, Judge Eric Komitee announced the jury’s decision. Braden John Karony, the former CEO of SafeMoon, was found guilty on multiple charges, including conspiracy to commit wire fraud, money laundering, and securities fraud. Throughout the trial, Karony, who presented himself in a sharp blue suit, maintained a calm demeanor, showing little reaction to the verdict. In stark contrast, former investors in SafeMoon erupted in celebration, feeling vindicated after a lengthy four-year battle to expose the alleged fraud. Over the span of a 12-day trial, prosecutors effectively demonstrated that Karony and his accomplices misled investors regarding SafeMoon’s features and financial status, ultimately extracting around $200 million in what was referred to as a “slow rug-pull.”
Karony Faces Potentially Lengthy Prison Sentence
With his conviction, Karony now faces a prison sentence that could extend up to 45 years, although it is anticipated that he will receive a lesser term. For context, former FTX CEO Sam Bankman-Fried was sentenced to 25 years for a fraud case significantly larger in scale. This comparison illustrates SafeMoon’s relative obscurity within the broader crypto landscape, where many experienced investors deemed it a mere joke even at its inception. The token’s dramatic downfall, marred by serious fraud allegations, was eclipsed by more substantial scandals involving larger entities such as Three Arrows Capital, Celsius, and FTX. However, the SafeMoon saga, replete with its absurdities, internal conflicts, and delusional aspirations, may serve as a more vivid representation of the rampant fraud during the crypto boom than the more polished cons.
The Setting of the Trial
The Eastern District of New York courthouse, located in a serene area near downtown Brooklyn, offers a glimpse into a world disconnected from the fast-paced 21st century. The courthouse, surrounded by a picturesque park, requires visitors to surrender their smartphones before entering. Unlike the Southern District of New York, where patrons exchange phones for metal tokens, here, they receive wooden blocks instead. US Marshals, predominantly friendly retirees from law enforcement, manage the security checks. Judge Komitee presides over a spacious courtroom on the sixth floor, where the atmosphere is both formal and imposing, reminiscent of a basketball court with soaring ceilings.
Trial Dynamics
From the trial’s outset, Karony appeared to be at a disadvantage, partly due to the jurisdiction of the Eastern District, known for its history of prosecuting financial crimes and its experienced jurists. This court often sees cases involving high-profile financial fraudsters, contributing to a jury pool well-versed in complex financial matters. Karony’s jury paid close attention throughout the proceedings, taking detailed notes, while the prosecution’s team, notably led by women, presented a compelling case against him.
The Prosecution’s Opening Statements
During the trial, Assistant US Attorney Jessica Weigel opened with a strong indictment, asserting that Karony deceived investors for personal gain, promising them a “safe” investment that turned out to be misleading. SafeMoon’s core proposition involved a liquidity pool that was allegedly “locked” to ensure investor security, a claim that Weigel decisively refuted, explaining that the locking mechanism was insufficient and merely a façade to appease anxious investors.
Key Testimonies and Evidence
The prosecution’s case hinged on testimonies from key witnesses, including former SafeMoon CTO Thomas “Papa” Smith, who pleaded guilty to charges and agreed to testify against Karony. Smith revealed that, from the outset, the core team had been misappropriating funds from the liquidity pool for personal luxuries, including high-end cars and extravagant purchases. This was indicative of the reckless behavior characteristic of many individuals caught up in the euphoria of quick financial gain.
Challenges Faced by Karony’s Defense
Karony’s defense was led by a single attorney, Nicholas Smith, who faced significant challenges due to limited resources and prior legal representation withdrawal. Despite this, he put forth a defense that questioned whether Karony had knowingly participated in a conspiracy, emphasizing the lack of consensus among the SafeMoon team regarding their actions. He pointed out that many misleading claims originated from others involved in the project prior to Karony’s joining.
Characterization of the SafeMoon Project
The prosecution painted a picture of SafeMoon as a fundamentally flawed and potentially fraudulent project, leveraging testimonies from investors and former team members. SafeMoon’s unique tax structure, which penalized sellers while rewarding holders, was highlighted as a misguided attempt to create an illusion of stability and safety, despite the absence of real utility in the token itself.
The Verdict and Aftermath
After several hours of deliberation, the jury returned with a guilty verdict on all counts against Karony. Following the verdict, discussions emerged regarding the forfeiture of $1.8 million linked to Karony’s mansion sale and additional funds traced back to the SafeMoon liquidity pool. The courtroom atmosphere post-verdict was unexpectedly light, with Karony displaying a relaxed demeanor, seemingly unfazed by the gravity of his situation. This odd juxtaposition left many observers taken aback as they reflected on the serious implications of the verdict against him.
