InvestorWarnings.com has released an update regarding the ongoing case involving SafeMoon Crypto News.
Regulatory Actions Against SafeMoon
SafeMoon, which initially gained considerable attention in the decentralized finance (DeFi) sector, is now under intense scrutiny from regulatory bodies within the United States. The Securities and Exchange Commission (SEC) and federal prosecutors have initiated legal actions against SafeMoon LLC and its leadership, alleging violations of securities regulations, fraud, and the misappropriation of investor funds.
SEC Allegations and Legal Proceedings
The SEC has filed a lawsuit against SafeMoon LLC, SafeMoon US LLC, and several key figures, including founder Kyle Nagy and CEO Braden John Karony. The commission claims that SafeMoon and its executives orchestrated a widespread fraudulent operation through an unregistered offering of the SafeMoon token. The SEC’s accusations center on the assertion that:
– The defendants misrepresented the status of the “locked liquidity pool,” claiming it was completely secured and inaccessible to company insiders. However, the complaint contends that a significant portion of liquidity was not actually locked, allowing executives to withdraw and misuse funds.
– Investors were led to believe in a journey “Safely to the moon,” indicating a promise of consistent growth and security. Contrary to this, the SEC reports that billions in market value were lost, with executives allegedly diverting over $200 million for personal expenditures, such as luxury properties, vehicles, and travel.
– Following a staggering price increase of over 55,000% in 2021, the disclosure that liquidity was not genuinely locked led to a market collapse. In response, the defendants allegedly attempted to stabilize the situation through manipulative trading tactics, including wash trading.
The SEC’s allegations involve breaches of multiple U.S. securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. This case is one of the most significant enforcement actions against a cryptocurrency project, highlighting regulators’ increasing readiness to classify certain tokens and their promoters as securities and to hold them accountable.
Criminal Charges and Conviction
In addition to the SEC’s civil actions, a separate criminal case was filed against SafeMoon’s executives. In May 2025, a federal jury in Brooklyn convicted Braden John Karony on all charges, which included conspiracy to commit securities fraud, wire fraud, and money laundering. The court mandated the forfeiture of properties and assets valued at around $2 million that were linked to the fraudulent activities. Prosecutors claimed that Karony and his associates had misled investors about the locked liquidity while misappropriating millions of dollars in SafeMoon tokens for personal gain. He now faces a lengthy prison sentence, contingent upon sentencing guidelines.
Further Regulatory Developments
In 2023, SafeMoon experienced a significant security breach: a vulnerability allowed an attacker to “burn” a substantial quantity of tokens from the liquidity pool, resulting in a dramatic price surge. This incident, along with its aftermath, drew criticism from both regulators and the community. The U.S. Department of Justice utilized civil asset forfeiture to recover over $680,000 in stolen cryptocurrency related to the breach and to reinstate funds to SafeMoon’s bankruptcy estate.
SafeMoon filed for Chapter 7 bankruptcy in late 2023, and by September 2025, a settlement of approximately $12 million was reached with investors through the bankruptcy trustee, but only after unsecured creditors were compensated. The FBI has called upon SafeMoon investors to share information regarding their losses and transactions as part of ongoing restitution and investigative efforts. Although the U.S. Department of Justice had indicated a potential reduction in crypto enforcement for certain cases, prosecutors confirmed their commitment to pursuing the SafeMoon matter.
Overview of SafeMoon
Launched on the BNB Chain, SafeMoon was introduced by SafeMoon LLC as a token project that rapidly attracted retail investors with its promise of guiding holders “safely to the moon.” The token’s structure included a built-in transaction fee of 10%, with portions redistributed to existing holders, allocated to liquidity, and earmarked for a growth fund. This unique tokenomics model created a perception of long-term viability, coupled with social media buzz and celebrity endorsements, leading to a significant initial surge in value. However, this rapid ascent was followed by an equally steep decline as transparency, sustainability, and genuine utility concerns emerged.
The project later launched “SafeMoon V2,” which consolidated tokens and modified fees, but ongoing challenges persisted. A serious security flaw, termed a “burn bug,” was exploited, allowing an attacker to artificially inflate the token’s price and extract funds. While some of the stolen funds were recovered, U.S. authorities seized over $680,000 associated with the exploit through civil asset forfeiture, initiating procedures to return it to SafeMoon’s bankruptcy estate.
SafeMoon’s troubles intensified when the SEC filed charges against SafeMoon LLC, SafeMoon US LLC, and executives, including Kyle Nagy, CEO Braden John Karony, and CTO Thomas Smith. The SEC accused them of running an unregistered securities offering, misleading investors regarding the “locked liquidity pool,” misappropriating over $200 million for personal luxuries, and engaging in manipulative trading practices. These civil allegations were followed by criminal prosecutions, resulting in a jury convicting Karony on multiple charges, including conspiracy to commit securities fraud. The court also mandated asset forfeiture related to the fraudulent scheme.
As SafeMoon filed for Chapter 7 bankruptcy in December, a settlement of $12 million was negotiated with investors by September 2025. However, this payment will not occur until unsecured creditors are fully compensated. At this juncture, trading activity for SafeMoon has significantly diminished, with many exchanges delisting the token and observers deeming the project effectively defunct. The ambitious products that were once promised, such as debit cards and an exchange, never materialized, resulting in substantial losses for many investors.
Although Karony’s defense argued that there was no coordinated effort to deceive and that some misleading statements were simply exaggerated claims, regulators and prosecutors emphasized the extensive misrepresentations and the executives’ access to supposedly “locked” funds. The involvement of founder Kyle Nagy is still under investigation, raising questions about the full scope of investor losses and the ultimate restitution amount. While some funds have been recovered and settlements have been established, the downfall of SafeMoon serves as a stark warning in the cryptocurrency landscape, illustrating the potential dangers of rapid speculation, obscure structures, and unverified promises leading to severe repercussions for retail investors.
Investment Considerations in the Digital Age
The rise of digital finance has made investing more accessible than ever. With stock trading apps, robo-advisors, cryptocurrency exchanges, and peer-to-peer lending platforms, anyone with internet access can invest with just a few clicks. However, this convenience also brings new risks that all investors must consider before committing their funds.
The foremost consideration is regulation. A legitimate online investment platform should be licensed or registered with recognized financial authorities. Regulation offers a layer of protection for investors against fraud and misconduct. Many fraudulent platforms mimic professional websites and make extravagant promises, but without regulatory oversight, investors have limited recourse if issues arise. It is crucial to verify a platform’s credentials through the regulator’s official site rather than relying on the platform’s claims.
Reputation is another vital factor. Before selecting an investment platform, conduct thorough research by reading independent reviews, checking alerts from consumer watchdogs, and examining user feedback in forums. A history of complaints about delayed withdrawals, hidden fees, or unresponsive customer service should raise red flags. In today’s digital landscape, a platform’s reputation often provides a more accurate measure of reliability than flashy marketing or celebrity endorsements.
Security is of utmost importance. As online investing involves sharing sensitive personal and financial information, ensure that the platform prioritizes cybersecurity. Look for essential protections such as HTTPS encryption, strong password requirements, and two-factor authentication. A trustworthy provider should also clarify how they safeguard client funds, whether through asset segregation, insurance, or partnerships with reputable financial institutions.
Transparency regarding fees and costs can significantly impact your long-term returns. Hidden charges—whether through spreads, management fees, or withdrawal costs—can quickly diminish profits. The best platforms are upfront about all potential costs, enabling you to make informed decisions. Take the time to understand how the platform generates revenue and how much of your return will actually reach your account.
It is also important to acknowledge that all investments carry inherent risks, regardless of how secure they may appear. Be wary of any service that guarantees returns or promises risk-free profits, as these claims often indicate fraudulent schemes aimed at deceiving unsuspecting investors. Instead, focus on understanding the specific risks associated with each asset class—stocks, bonds, cryptocurrencies, real estate, or commodities—and assess your own risk tolerance.
Withdrawal policies should be scrutinized as well. A reliable platform must allow you to access your funds without unnecessary delays or conditions. A common warning sign of online fraud is the sudden imposition of “taxes” or “fees” when attempting to withdraw money. Testing a small withdrawal before committing larger amounts can help confirm that the platform meets its obligations.
Finally, successful investing requires discipline and diversification. Avoid concentrating all your funds on a single platform or asset. Spread your investments across various sectors, markets, and tools to mitigate the risk of significant losses. Adopting a long-term perspective is essential: real wealth is built over time, not through quick gains. Reputable platforms should provide educational resources, responsive customer support, and clear guidance to help you make informed financial decisions.
Investing online opens up exciting opportunities, but it also necessitates caution and thorough research. By focusing on regulation, reputation, security, transparency, and risk awareness, you can protect yourself from fraud while taking advantage of the convenience offered by digital platforms. The golden rule is straightforward: if something seems too good to be true, it probably is. Approach every platform critically, diversify your investments, and always invest within your financial limits.
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