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The U.S. Department of Justice unsealed an indictment charging SafeMoon executives Braden John Karony, Kyle Nagy, and Thomas Smith with conspiracy to commit securities fraud, conspiracy to commit wire fraud and money laundering.
Prosecutors said Karony was arrested in Provo, Utah, and Smith was arrested in Bethlehem, New Hampshire, and Nagy remains at large.
The news comes the same day that the Securities and Exchange Commission filed civil charges against SafeMoon and its executives for a "massive fraudulent scheme" that cost investors billions.
SafeMoon was launched in March 2021 and caught on with investors for giving half the proceeds from its 10% transaction fee to token holders. At its peak, SafeMoon's price reached $0.00338272 in January 2022, according to CoinGecko. But it's since fallen to $0.00019274 on news of the DOJ indictment and SEC civil charges.
According to the indictment, the defendants "lied to SFM investors concerning whether SFM’s use of ‘locked’ liquidity was inaccessible to the defendants, as well as their personal holding and trading of SFM." While SafeMoon grew to a market capitalization more than $8 billion, the DOJ alleges its executives "fraudulently diverted and misappropriated millions of dollars' worth of purportedly ‘locked’ SFM liquidity for their personal benefit." Federal prosecutors say those benefits included "the purchase of luxury vehicles, real estate, and personal investments."
Among the luxury purchases was a "$860,000 custom Porsche 911 sports car" for Smith, prosecutors said in their indictment.
“As alleged, the defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles and real estate,” U.S. Attorney Breon Peace stated said in a press release.
The DOJ went on to say that the SafeMoon execs used "complex transaction routing, and pseudonymous centralized exchange accounts" to mask their activities.
Earlier in the day, Karony was arrested in Utah and Smith in New Hampshire. Nagy remains at large. If convicted, the defendants face up to 25 years in prison. Karony, Nagy, and Smith have not issued public statements on the charges.
The SEC and DOJ investigations into SafeMoon are ongoing. Investors are cautioned to exercise care when investing in cryptocurrencies.
Editor’s note: This article was written with the assistance of AI. Edited and fact-checked by Stacy Elliott.