The US Securities and Exchange Commission (SEC) has charged
SafeMoon, its Founder Kyle Nagy, SafeMoon US, and the company’s top
executives, John Karony and Thomas Smith. The regulator has revealed a fraudulent scheme involving the unregistered sale of SafeMoon tokens (SFM), a cryptocurrency that promised investors huge returns.
The SEC is accusing the crypto project’s executives of a fraudulent scheme that misled investors by assuring the safety
of their funds while, in reality, large portions of the liquidity pool were
never locked. This resulted in misappropriation of funds exceeding $200 million
for personal use.
David Hirsch, the Chief of the SEC Enforcement
Division’s Crypto Assets and Cyber Unit, stated: “Decentralized finance claims
to deliver transparency and predictable outcomes, but 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.”
SFM experienced a surge in price by over 55,000
percent from March 12 to April 20, 2021, the SEC reported. Its market capitalization reached a
staggering $5.7 billion during this period. However, this was short-lived when
the truth about the unlocked liquidity pool came to light in April 2021.
This revelation led to a price crash of nearly 50%.
Following the price crash, Karony and Smith
allegedly used misappropriated assets to prop up SFM’s price and
manipulate the market. Additionally, Karony is accused of engaging in wash
trading, a practice that created a false impression of market activity.
Today we charged SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies’ CEO, John Karony, and Chief Technology Officer, Thomas Smith, for perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon.
— U.S. Securities and Exchange Commission (@SECGov) November 1, 2023
The SEC has filed its complaint in the US District
Court for the Eastern District of New York, charging the defendants with
violating the registration and anti-fraud provisions of the Securities Act of
1933, and the anti-fraud provisions of the Securities Exchange Act of 1934.
SafeMoon Executives Face Multiple Federal Charges
The founders and executives of SafeMoon are facing
federal charges of conspiracy to commit securities fraud, wire fraud, and money
laundering. Karony, Nagy, and Smith are accused of
orchestrating a fraudulent scheme that misled the investors of SFM and misappropriated millions of dollars.
Karony and Smith have already been arrested. Karony was apprehended in Provo, Utah, and Smith in Bethlehem, New Hampshire.
However, Nagy remains at large, with law enforcement actively seeking his
apprehension. Separately, the US Department of Justice has filed lawsuits
against the founders of SafeMoon in a federal court in Brooklyn.
The US Securities and Exchange Commission (SEC) has charged
SafeMoon, its Founder Kyle Nagy, SafeMoon US, and the company’s top
executives, John Karony and Thomas Smith. The regulator has revealed a fraudulent scheme involving the unregistered sale of SafeMoon tokens (SFM), a cryptocurrency that promised investors huge returns.
The SEC is accusing the crypto project’s executives of a fraudulent scheme that misled investors by assuring the safety
of their funds while, in reality, large portions of the liquidity pool were
never locked. This resulted in misappropriation of funds exceeding $200 million
for personal use.
David Hirsch, the Chief of the SEC Enforcement
Division’s Crypto Assets and Cyber Unit, stated: “Decentralized finance claims
to deliver transparency and predictable outcomes, but 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.”
SFM experienced a surge in price by over 55,000
percent from March 12 to April 20, 2021, the SEC reported. Its market capitalization reached a
staggering $5.7 billion during this period. However, this was short-lived when
the truth about the unlocked liquidity pool came to light in April 2021.
This revelation led to a price crash of nearly 50%.
Following the price crash, Karony and Smith
allegedly used misappropriated assets to prop up SFM’s price and
manipulate the market. Additionally, Karony is accused of engaging in wash
trading, a practice that created a false impression of market activity.
Today we charged SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies’ CEO, John Karony, and Chief Technology Officer, Thomas Smith, for perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon.
— U.S. Securities and Exchange Commission (@SECGov) November 1, 2023
The SEC has filed its complaint in the US District
Court for the Eastern District of New York, charging the defendants with
violating the registration and anti-fraud provisions of the Securities Act of
1933, and the anti-fraud provisions of the Securities Exchange Act of 1934.
SafeMoon Executives Face Multiple Federal Charges
The founders and executives of SafeMoon are facing
federal charges of conspiracy to commit securities fraud, wire fraud, and money
laundering. Karony, Nagy, and Smith are accused of
orchestrating a fraudulent scheme that misled the investors of SFM and misappropriated millions of dollars.
Karony and Smith have already been arrested. Karony was apprehended in Provo, Utah, and Smith in Bethlehem, New Hampshire.
However, Nagy remains at large, with law enforcement actively seeking his
apprehension. Separately, the US Department of Justice has filed lawsuits
against the founders of SafeMoon in a federal court in Brooklyn.
