SEC Charges SafeMoon with Offering Crypto Securities and Alleges Massive Fraud
The Security and Exchange Commission (SEC), led by Gary Gensler, has taken action against crypto company SafeMoon for offering crypto securities and has also filed charges against its executive team for alleged fraud. This marks a shift in the SEC’s focus towards targeting fraudulent crypto companies, while simultaneously pursuing other cases such as LBRY and Coinbase.
SafeMoon and Execs Face Charges
SafeMoon, a crypto company that Crypto Daily warned against in August 2021, is now facing enforcement action by the SEC. The SEC accuses SafeMoon of issuing unregistered securities, a charge that could potentially apply to many other crypto companies in the eyes of Chairman Gensler. However, what sets this case apart is that the SEC has also charged the executive team at SafeMoon with committing serious fraudulent activities.
Funds Not Locked as Claimed
The press release from the SEC reveals that SafeMoon’s creator Kyle Nagy, CEO John Karony, and CTO Thomas Smith have been charged with wiping out billions in market capitalization, withdrawing $200 million worth of crypto assets, and misappropriating investor funds for personal use. Despite Nagy’s claim that the funds were safely locked and inaccessible to anyone, including the management team, it is alleged that large portions of the funds were never locked. The management team was able to withdraw them for personal expenses like buying luxury cars and funding extravagant travel.
Price Manipulation and Wash Trading
The SEC states that SafeMoon’s price skyrocketed over 55,000%, reaching a market cap of $5.7 billion before plummeting 50% when it was revealed that the funds were not locked as claimed. To prop up the price, Karony and Smith used investor funds to buy large amounts of SafeMoon. Karony was also accused of engaging in “wash trading” by using a separate trading account to create artificial market activity for the SafeMoon token.
Warning Against Crypto Scammers
In addition to the charges against SafeMoon, the SEC used the press release as an opportunity to warn the public about scammers operating in the crypto space. Jorge G. Tenreiro, Deputy Chief of the CACU, emphasized the need for extreme caution, stating that fraudsters often exploit the popularity of crypto assets to promise high profits but ultimately deliver losses.
Hot Take: SEC Cracks Down on SafeMoon and Exposes Crypto Fraud
The SEC’s charges against SafeMoon and its executive team highlight the agency’s commitment to tackling fraudulent activities in the crypto industry. This case serves as a warning to other crypto companies that may be engaging in similar practices. Investors must exercise caution and conduct thorough research before investing in any crypto project to avoid falling victim to scams. As the popularity of crypto assets continues to rise, it is crucial for regulators and investors alike to remain vigilant and hold accountable those who seek to exploit this emerging market.
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