SafeMoon CEO Convicted in Major Fraud Case
In a significant development in the cryptocurrency sector, Braden Karony, the CEO of SafeMoon, has been found guilty by a federal jury in the Eastern District of New York. The jury’s decision comes after a 12-day trial, where Karony faced serious charges including conspiracy to commit securities fraud, wire fraud, and money laundering. His conviction could result in a lengthy prison sentence of up to 45 years. Additionally, the jury has mandated the forfeiture of a residential property and the proceeds from another property, collectively valued at around $2 million.
Misleading Investors and Diverted Funds
Evidence presented by prosecutors revealed that Karony and his associates intentionally deceived investors regarding the safety and structure of the SafeMoon token, which was launched in 2021. The token imposed a 10% transaction fee on transfers, with claims that half of this amount would be redistributed to holders and the remaining portion secured in a liquidity pool to facilitate trading. However, it was uncovered that Karony and others had continued to access the liquidity pool, siphoning off significant funds for personal expenditures, which starkly contradicted their public assertions of not trading or holding SafeMoon tokens.
The Fraud Scheme Exposed
During the trial, the court was informed that Karony personally acquired over $9 million in cryptocurrency assets through the fraudulent scheme. He utilized these misappropriated funds to buy various properties and luxury vehicles, including an Audi R8 and Tesla, along with customized trucks. To obscure his illicit actions, Karony employed a network of anonymous wallets and unregistered accounts on centralized exchanges, enabling him to evade detection for an extended period. U.S. Attorney Joseph Nocella, Jr. remarked that the SafeMoon token was anything but secure, ultimately proving to be an illusory investment for those misled by Karony, who sought rapid wealth through fraudulent means.
Investor Impact and Jury Deliberation
The SafeMoon token had once achieved a remarkable market capitalization exceeding $8 billion, but it plummeted amid fraud accusations, resulting in significant financial losses for numerous investors. The jury deliberated for only a few hours after a two-week trial marked by Karony’s continual assertions of innocence. Notably, Thomas Smith, the former Chief Technology Officer of SafeMoon, testified against Karony after accepting a guilty plea in exchange for cooperation with prosecutors. Another co-defendant, Kyle Nagy, who was instrumental in creating the platform, remains unaccounted for and is believed to have fled to Russia.
Extensive Investigative Efforts
The investigation into this case involved multiple federal agencies, including the FBI, IRS Criminal Investigation, and Homeland Security Investigations, with support from the U.S. Securities and Exchange Commission. Karony’s conviction adds to a growing list of high-profile crypto fraud cases, reminiscent of the sentences received by former Celsius CEO Alex Mashinsky, who was sentenced to 12 years, and former FTX CEO Sam Bankman-Fried, who faced 25 years in prison following his trial in 2023.
