Defense for Former SafeMoon CEO Aims to Undermine Prosecutors’ Evidence
The defense team representing John Karony, the former CEO of SafeMoon, concluded its arguments on the evening of May 20, aiming to cast doubt on the strong evidence presented by prosecutors. Karony faces serious charges, including conspiracy to commit wire fraud, securities fraud, and money laundering, linked to the SafeMoon crypto token, which experienced a significant rise in popularity and market valuation during the height of the 2021 crypto bull market, a period notorious for fraudulent activities. Prosecutors have effectively illustrated that Karony misrepresented key aspects of SafeMoon, particularly regarding its liquidity pool, which was allegedly “locked,” and the revenue streams from exchanges like BitMart that dealt in the token.
Defense Highlights Ambiguities in Government Claims
Nicholas Smith, Karony’s lead defense attorney, focused on what he described as inconsistencies and ambiguities in the prosecution’s narrative. He pointed out that Karony had joined the SafeMoon team after much of the misleading information had already been disseminated. Notably, the SafeMoon Whitepaper, which laid out the project’s framework, was authored by developer Kyle Nagy prior to Karony’s appointment as CEO. However, the prosecution has indicated that misleading statements persisted for nearly ten months following Karony’s arrival.
Defense Argues Lack of Intent and Knowledge
Smith also revisited the argument that Karony may not have had a thorough understanding of cryptocurrencies at the time of his allegedly misleading statements, asserting that “fraud isn’t just about intent, it’s about a level of knowledge.” Some of Smith’s claims, however, appeared to stretch the bounds of credibility. He labeled SafeMoon’s posts indicating “locks” on large quantities of tokens as evidence that the liquidity pool was not entirely secure, a point he has consistently maintained throughout the trial. Meanwhile, prosecution witnesses contended these posts were designed to divert the attention of SafeMoon investors from unfavorable developments.
Disagreements Among Executives and Conspiracy Claims
In another part of his defense, Smith played a segment from a SafeMoon team AMA, highlighting discussions about locking the liquidity pool as an acknowledgment that it was not fully secured. He further contended that apparent discord among SafeMoon executives regarding the liquidity pool’s treatment negated the possibility of a collective “conspiracy.” Smith argued that “conspiracy requires agreement,” despite the fact that these disagreements appeared to be minor obstacles in the pursuit of personal gain.
Defense Challenges Fraud Allegations
Smith also posited that several statements attributed to Karony as fraudulent did not meet the threshold for fraud. He specifically mentioned claims that SafeMoon was “safe,” arguing that they lacked concrete factual content. This line of reasoning resembles the “puffery” defense used in other fraud cases, which suggests that a certain level of exaggeration is permissible in marketing without crossing into fraudulent territory. These arguments may have succeeded in instilling some doubt among jurors as they prepare to deliberate on the case, with the jury set to begin discussions the following morning on May 21.
