US authorities have arrested two executives and the creator of crypto company SafeMoon for allegedly defrauding investors.
SafeMoon creator Kyle Nagy, CEO Braden John Karony and chief technology officer Thomas Smith are accused by the US Department of Justice (DOJ) of deliberately misleading investors.
According to the DOJ, the three defendants falsely claimed that assets in SFM liquidity pools could not be withdrawn by anyone. The three would have had access to withdraw assets from these pools.
The three then allegedly diverted more than $200 million in investments from their clients to enrich themselves and pay for expensive purchases, including a custom Porsche sports car, other luxury vehicles and real estate.
The DOJ has charged Nagy, Karony and Smith with conspiracy to commit securities fraud, conspiracy to commit bank fraud and conspiracy to commit money laundering.
Says Thomas M. Fattorusso, Special Agent in Charge of the Internal Revenue Service Criminal Investigation (IRS-CI),
“While this fraud scheme may be complex, the end result is simple: theft. Investors were assured that their money would be safe, while the suspects allegedly deceived investors and embezzled millions of dollars to line their pockets and driveways.”
The US Securities and Exchange Commission (SEC) has also filed charges against the three, alleging they carried out a massive fraudulent scheme through the unregistered sale of a crypto asset security.
“Defendants promised to take the price of the token ‘Safe to the Moon’, but instead of making a profit, they wiped out billions in market cap, extracted crypto assets worth over $200 million from the project, and misappropriated investor funds for personal use. .”
Karony and Smith were arrested Wednesday while Nagy was still at large.
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