SEC Files Criminal Complaint Against SafeMoon

The US Securities and Exchange Commission (SEC) has filed a criminal complaint against SafeMoon, its founder Kyle Nagy, SafeMoon US, and its CEO John Karonon and CTO Thomas Smith.

Through the unregistered sale of the cryptocurrency security SafeMoon, the defendants are accused of operating a large-scale fraud scheme.

Despite assurances that the token price would “safely reach the moon,” the defendants allegedly wiped out billions of dollars in market value, siphoned over $200 million in crypto assets from the project, and misappropriated investor funds for personal gain.

David Hirsch, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit (CACU), warned that unregistered sales lack required disclosures and accountability, making them attractive to fraudsters like Nagy, who exploit these vulnerabilities for personal enrichment.

The SEC’s complaint alleges that Nagy assured investors that the funds were securely locked in SafeMoon’s liquidity pool and could not be withdrawn.

The defendants allegedly embezzled millions of dollars for personal luxuries such as McClaren automobiles, extravagant trips, and luxury homes.

Vice President of the CACU, Jorge G. Tenreiro, urged investors to exercise extreme caution with crypto assets due to the prevalence of fraudsters offering astronomical returns.

According to the complaint, SafeMoon’s price increased by more than 55,000 percent between March 12 and April 20, 2021, reaching a market value of over $5.7 billion.

On April 20, 2021, it was revealed that SafeMoon’s liquidity pool was not locked as claimed, which resulted in a price decline of approximately 50 percent.

After this decline, Karony and Smith allegedly used embezzled funds to make large purchases to increase the price of SafeMoon and manipulate the market.

Karony is also accused of using a trading platform account to purchase and sell SafeMoon to stimulate market activity.