Founders of SafeMoon Charged with Fraud and Conspiracy
The founders of the cryptocurrency SafeMoon have been charged with fraud and conspiracy by the U.S. government, along with accompanying charges from the Securities and Exchange Commission (SEC). Braden John Karony and Thomas Smith were arrested in Provo, Utah and Bethlehem, New Hampshire, respectively, while Kyle Nagy remains at large.
The SafeMoon Fraud Allegations
According to attorneys, the founders of SafeMoon deliberately misled investors and misused SFM liquidity for personal gain. They diverted millions of dollars to purchase luxury vehicles and real estate, despite claiming that the liquidity was locked.
“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,” stated United States Attorney Peace.
SafeMoon launched SFM on the Binance Smart Chain in 2021, promising to take the token’s price “safely to the moon.” However, prosecutors claim that the founders had access to these tokens and used them for their own benefit. They also engaged in trading SRM tokens for significant profits.
The SEC has also charged SafeMoon’s founders with securities fraud for issuing SFM without complying with anti-fraud provisions of securities acts.
“Unregistered offerings lack the disclosures and accountability that the law demands, and they attract scammers like Kyle Nagy, who use these vulnerabilities to enrich themselves at the expense of others,” said David Hirsch from the SEC enforcement division.
SafeMoon’s History
In April 2021, SafeMoon reached a market capitalization of $5.7 billion but faced a 50% decline when investors discovered that the liquidity pool was not truly locked. In March 2023, the company disclosed an $8.9 million loss due to a smart contract exploit, leading to suspicions of intentional manipulation.
In 2022, several celebrity influencers, including Jake Paul and Soulja Boy, were sued for promoting SafeMoon in a class action lawsuit that described it as a “Ponzi” scheme.
Hot Take: SafeMoon Founders Face Legal Consequences for Fraudulent Actions
The founders of SafeMoon are facing serious legal charges for their alleged fraudulent activities. The U.S. government and the SEC accuse them of deliberately misleading investors and misusing funds for personal gain. These charges highlight the risks associated with investing in cryptocurrencies and the need for regulatory oversight to protect investors.
The downfall of SafeMoon, once valued at billions of dollars, serves as a cautionary tale for those considering investing in similar projects. It emphasizes the importance of conducting thorough research and due diligence before committing funds to any cryptocurrency.
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