SafeMoon, a project that aimed to prevent holders from cashing out with large fees, experienced a drastic decline when investors discovered that the promised investment pools were not locked. This occurred in the same month that the project reached a market cap of $5.7 billion.
Founders’ Trial Underway
According to court documents, prosecutors allege that SFM tokens were used to fund a luxurious lifestyle for the project’s leaders.
“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.”
This belief is supported by a nearly $9 million smart contract exploit suffered by the project earlier this year, which many suspect was an inside job.
The founders Kyle Nagy, Thomas Smith, and Braden John Karony are accused of securities fraud. If found guilty, Karony – the project’s CEO – faces a maximum of 45 years in jail.
Bail Order to Be Reviewed By Judge
Karony and Smith were arrested earlier this month, while Nagy remains free for undisclosed reasons. Smith has secured bail with a $500k bond and is reportedly pursuing a plea deal.
Karony also tried to secure temporary release but was blocked by the prosecution a day later.
On November 8th, Karony was granted bail for the same amount as his co-executive. If granted, he would be allowed to live in his Miami apartment with restrictions on crypto exchanges and promotions of his businesses.
However, New York District Judge LaShann DeArcy Hall stayed Judge Oberg’s decision to approve bail following a hearing in Utah due to concerns about Karony being a flight risk and having access to substantial financial assets.
“If convicted, the defendant faces a statutory maximum of 45 years’ imprisonment. These facts all provide powerful incentives for the defendant to leverage his substantial (and opaque) financial assets and foreign ties to avoid that outcome.”
Karony’s bail conditions will be reviewed at a later date – and may be revoked entirely.
Hot Take
SafeMoon founders face trial amid allegations of using investor funds for personal gain and potential prison sentences if found guilty. The battle over bail conditions continues as prosecutors argue that one of the founders poses a significant flight risk with access to substantial financial assets. The case continues with ongoing scrutiny over the founders’ actions and potential consequences if convicted.
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