Crypto Mania Exchanges

SafeMoon Executives Hit with SEC and DOJ Charges for Unregistered Sales and Criminal Conspiracy

The SEC and DOJ have unleashed plenty of charges against Braden. John Karony, Kyle Nagy, and Thomas Smith, executives of SafeMoon LLC

Accusing the crypto and blockchain enterprises of stealing user funds, illegal security sales, and a web of criminal conspiracies

Charges Imposed By SEC

Today, on 1st November 2023, the U.S. Securities and Exchange Commission has charged SafeMoon LLC, its creator Kyle Nagy, its U.S. branch- SafeMoon US LLC, and the companies’ Chief Technology Officer, Thomas Smith, and Chief Executive Officer, John Karony, with carrying out a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon. 

The SEC’s complaint claims that the Defendants withheld cryptocurrency assets worth over $200 million from the project, misappropriated investor funds for personal use, and promised to take the token price “safely to the moon” in exchange for profits. Instead of delivering on their promises, the defendants destroyed billions of dollars in market capitalization.

As per the SEC’s complaint, the founder of SafeMoon LLC Kyle Nagy promised investors that the funds they kept in the company’s liquidity pool were securely locked and could not be withdrawn by anybody, including the defendants. 

But as alleged by the SEC, a sizable amount of the liquidity pool was never secured, and the defendants stole millions of dollars to buy luxury residences, exotic vacations, McClaren automobiles, and other luxury items, misappropriating customer funds. 

Words From The SEC’s Officials

“Decentralized finance promises predictability and transparency, but unregistered offerings don’t provide the disclosures and accountability required by law, and they draw scammers like Kyle Nagy who take advantage of these weaknesses to make money off of other people,” stated David Hirsch, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit (CACU).

Jorge G. Tenreiro, Deputy Chief of the CACU, stated, “We urge investors to continue to exercise extreme caution in this space, as fraudsters exploit the popularity of crypto assets to promise astronomical profits while all too frequently only delivering a crash landing.”

More Details About The Allegation

According to the SEC’s complaint, SafeMoon’s price increased by over 55,000 percent between March 12 and April 20, 2021, reaching a market capitalization of over $5.7 billion before a nearly 50% decline in value occurred on April 20, 2021, when the public discovered that SafeMoon’s liquidity pool was not locked as claimed. 

Karony and Smith are accused of using embezzled funds to buy a significant amount of SafeMoon following this decline to manipulate the market and keep the company’s price high. To give the appearance of market activity, Karony is also accused of using a trading platform account he formed to purchase and sell SafeMoon—a tactic known as wash trading. 

The defendants are accused of breaching the registration and anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 by the SEC’s complaint, which was filed in the U.S. District Court for the Eastern District of New York.

John Lucas led the SEC’s inquiry, with help from John Marino, Pamela Sawhney, John Crimmins, and Sejal Bhakta. Mr. Tenreiro, Mr. Hirsch, and Deborah A. Tarasevich oversaw it. Under James Connor’s guidance, Dean M. Conway and Oren Gleich will spearhead the SEC’s legal action.

The FBI and the U.S. Attorney’s Office for the Eastern District of New York, which launched a simultaneous criminal case, are much appreciated by the SEC.

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