The American Securities and Exchange Commission (SEC) recently announced this announced cost against SafeMoon, its creator Kyle Nagy, the company’s CEO John Karony, and CTO Thomas Smith.
The SEC alleges that these individuals orchestrated a “massive fraudulent scheme” involving the unregistered sale of SafeMoon (SFM), a “security of crypto assets” as defined by the SEC.
According to the complaint, instead of delivering the promised profit and with the “Safely to the Moon” token, the defendants allegedly wiped out billions in market capitalization, embezzled investor funds, and withdrew more than $200 million in crypto assets for personal use.
On this issue, David Hirsch, head of the SEC Enforcement Division’s Crypto Assets and Cyber Unit, emphasized the need for caution in the decentralized finance (DeFi).
SEC charges SafeMoon and executives
According to the complaint, Kyle Nagy assured investors that money was coming into SafeMoon’s liquidity pool were securely locked and accessible to no one, including the defendants.
However, according to the SEC’s investigation, large portions of the liquidity pool were never blocked and the defendants millions of dollars embezzledindulging in extravagant purchases such as McLaren cars, luxury homes and lavish travel.
The SEC’s complaint shows that SFM’s price skyrocketed by more than 55,000 percent before plummeting by nearly 50 percent when the public discovered that the liquidity pool was not locked as claimed.
Karony and Smith in particular are said to have used misappropriated assets manipulate the market and increasing the price of SafeMoon through wash trading.
The SEC’s complaint, filed in the US District Court for the Eastern District of New York, accuses the defendants of violating the registration and anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
Securities fraud charges against executives
A indictment was also unsealed in federal court in Brooklyn, charging Braden John Karony, Kyle Nagy and Thomas Smith with conspiracy to commit securities fraud, wire fraud and money laundering conspiracy. Breon Peace, United States Attorney for the Eastern District of New York, announced the arrests and charges.
United States Attorney Peace emphasized the commitment to prosecuting digital asset fraudsters, stating that their “ill-gotten gains” would not protect them from justice.
Ivan J. Arvelo, Special Agent-in-Charge of Homeland Security Investigations, New York, highlighted the “relentless pursuit” of individuals who exploit investors and the financial system for personal gain.
It is notable that the allegations in the indictment are accusations and the defendants are presumed innocent until proven guilty.
SFM token crashes to its lowest trading price since launch
Following the recent disclosure of the news, SFM has a significant crash, with a drop of more than 52%. Currently, the token is trading at $0.00009142, which is the lowest trading price since its launch in 2022. This substantial decline of more than 72% in the past year underlines the seriousness of the matter.
Furthermore, when examining other time frames, the token has seen declines of 49%, 34%, and 24% over the past seven, fourteen, and thirty days respectively. These figures highlight the continued downward trend and highlight the scale of the situation.
Featured image from Shutterstock, chart from TradingView.com
