New York Prosecutors Continue with SafeMoon CEO’s Trial Despite DOJ Directive
Prosecutors in New York have confirmed their intention to move forward with the trial of SafeMoon CEO Braden John Karony, even in light of the recent guidance from the US Department of Justice (DOJ) aimed at reducing certain enforcement actions in the cryptocurrency sector. This decision compounds Karony’s legal challenges, particularly after he lost his previous legal representation due to a lack of funds to cover their fees.
Karony’s Legal Troubles Persist Despite Crypto-Friendly Memo
On April 7, US Deputy Attorney General Todd Blanche issued a memo advising prosecutors to halt digital asset-related lawsuits that could be seen as pursuing “regulation by persecution.” This directive is part of a larger trend toward a more lenient approach to cryptocurrency regulation under the administration of former President Donald Trump. However, in a court filing dated April 18, John Durham, the Attorney General for the Eastern District of New York, reiterated his office’s determination to uphold all charges against SafeMoon’s John Karony after reviewing the case in light of Blanche’s memo. In November 2023, the Eastern District of New York had indicted Karony along with two other SafeMoon executives, Kyle Nagy and Thomas Smith, for allegedly orchestrating a fraudulent scheme worth hundreds of millions of dollars. The trio had promoted the SafeMoon (SFM) token to investors while misleading them about the actual functioning of the claimed SFM lock liquidity feature.
Allegations of Fraud and Misappropriation of Funds
As interest in SFM investments surged, Karony and his co-defendants reportedly misappropriated substantial funds from users, diverting approximately $200 million worth of supposedly secured SFM tokens for personal use. The US Securities and Exchange Commission (SEC) has also launched a parallel case against the SafeMoon executives, accusing them of engaging in price manipulation that followed the revelation of the fraudulent activities.
Potential Lengthy Prison Sentence for SafeMoon CEO
John Karony, along with the other implicated individuals, faces serious charges, including conspiracy to commit securities fraud, money laundering, and wire fraud. Notably, Karony and Smith were apprehended in their respective states of Utah and New Hampshire, while Smith remains unaccounted for. Initially, Karony’s legal team, Petrillo Klein & Boxer, had secured a $3 million bond but withdrew from the case due to Karony’s financial inability to continue their services. Now, he is expected to proceed to trial with a new attorney appointed through the Criminal Justice Act. Under US law, a single charge of wire fraud or money laundering could lead to a maximum prison sentence of 20 years, while securities fraud may result in an additional five years. If convicted on all counts, Karony could be facing a cumulative sentence that exceeds 40 years in federal prison.
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