[CryptoPotato]
The founders behind the once multi-billion dollar cryptocurrency, SafeMoon (SFM), have been charged with multiple counts of fraud and conspiracy by U.S. government, with accompanying charges from the Securities and Exchange Commission (SEC).
On Wednesday, founders Braden John Karony (aka “CPT_HODL_T_MUN”) and Thomas Smith (aka “papa”) were arrested in Provo, Utah and Bethlehem, New Hampshire, respectively. The third defendant, Kyle Nagy (aka “SafemoonDev”) remains at large.
The SafeMoon Fraud
Attorneys allege that the founders of the project deliberately lied to investors, misappropriating their purportedly “locked” SFM liquidity for their personal benefit.
“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 on the matter.
SafeMoon first issued SFM on the Binance Smart Chain (BSC) in 2021, with promises to take the price of the token “safely to the moon.” SFM’s smart contracts included a function that applied a 10% tax to every SFM transaction, with some of the tax’s proceeds going to purportedly “locked” liquidity pools.
Prosecutors allege, however, that founders actually had access to such tokens, and used them for their benefit. They also personally held and traded in SRM tokens despite claiming not to, netting them millions of dollars in profits.
Follow-up charges from the SEC alleged SafeMoon’s founders of securities fraud through the issuance of SFM, ignoring anti-fraud provisions of the 1933 and 1934 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 the SEC enforcement division’s David Hirsch in a statement.
SafeMoon’s History
SFM reached a market capitalization of $5.7 billion at its peak in April 2021 but quickly fell by 50% later that month when investors learned that its liquidity pool wasn’t truly locked.
In March 2023, SafeMoon also revealed that it had lost $8.9 million to a smart contract exploit, though many expected at the time that the bug may have been intentionally planted in its system.
In 2022, numerous celebrity influencers including Jake Paul and Soulja Boy were sued in a Class Action lawsuit for promoting SafeMoon, describing it as a “Ponzi” scheme.
The post SafeMoon (SFM) Founders Arrested and Charged By U.S. Government For Defrauding Investors appeared first on CryptoPotato.
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