The founders of the decentralized finance digital asset SafeMoon have been hit with criminal charges in the United States. Braden John Karony and Thomas Smith have been arrested and Kyle Nagy is still at large. The US Attorney’s Office for the Eastern District of New York has charged them with conspiracy to commit wire fraud and money laundering.
Released in March 2021, SafeMoon quickly gained popularity, reaching a market capitalization of over $8 billion. With each transaction, a 10% tax was imposed, with 5% allocated to benefit SFM holders and the other 5% to designated liquidity pools.
The defendants are accused of participating in a scheme to defraud investors. Allegations include misinformation about “locked” liquidity, misappropriation of millions of dollars from the liquidity pool, and diverting funds for personal gain.
The accused have been accused of trading SFM tokens for their own gain, even when the market price was high. Funds were allegedly hidden in un-hosted crypto wallets and anonymous exchange accounts and used to purchase luxury vehicles and real estate.
The case is being handled by the US Attorney’s Office’s Business and Securities Fraud Section. It serves as a reminder of the need for regulatory oversight in the cryptocurrency industry to protect investors and restore trust in digital assets. The legal proceedings will provide more information and the defendants will have their day in court.