TLDR:
- Braden Karony, SafeMoon CEO, found guilty of securities fraud, wire fraud, and money laundering
- Karony misappropriated millions in investor funds for luxury purchases including real estate and vehicles
- The jury deliberated for less than a day before delivering the guilty verdict
- Co-defendant Thomas Smith testified against Karony after pleading guilty
- SafeMoon once reached an $8 billion market cap before collapsing amid fraud allegations
Braden John Karony, the former CEO of cryptocurrency company SafeMoon, was found guilty on all counts in a U.S. federal fraud trial. The jury in the Eastern District of New York convicted Karony of conspiracy to commit securities fraud, wire fraud, and money laundering after less than a day of deliberation following a 12-day trial.
Prosecutors successfully argued that Karony misled investors about the structure and security of the SafeMoon token. He now faces up to 45 years in prison when sentenced.
The case centered around the SafeMoon token, which was launched in 2021. The token applied a 10% transaction tax on transfers, with half supposedly redistributed to token holders and the remainder locked in a liquidity pool to support trading.
However, the Justice Department proved that Karony and his co-conspirators retained access to this liquidity pool. They diverted substantial funds for personal use despite public claims they did not hold or trade SafeMoon tokens.
From Billions to Bust
SafeMoon had once reached a market capitalization exceeding $8 billion before collapsing amid mounting fraud allegations. The token’s dramatic rise and fall serves as a cautionary tale in the volatile cryptocurrency market.
Court records show Karony personally obtained more than $9 million in crypto assets from the scheme. The misappropriated funds were used to purchase multiple properties and luxury vehicles, including an Audi R8, a Tesla, and custom trucks.
The jury also ordered the forfeiture of one residential property and the proceeds from the sale of another, amounting to roughly $2 million.
Karony concealed his trading activity and use of investor funds through a series of pseudonymous wallets and unhosted accounts on centralized exchanges. This deception formed a key part of the prosecution’s case.
U.S. Attorney Joseph Nocella, Jr. stated that “The SafeMoon digital asset was anything but safe and turned out to be pie in the sky for investors who were deliberately misled by Karony, a man who sought to get rich quick by stealing and diverting millions of dollars.”
The case involved multiple law enforcement agencies. The FBI, IRS Criminal Investigation, and Homeland Security Investigations all participated in the investigation, with assistance from the U.S. Securities and Exchange Commission.
One of Karony’s co-defendants, Thomas Smith, who served as SafeMoon’s chief technology officer, pleaded guilty and testified against Karony during the trial. Smith is currently awaiting sentencing.
Another co-defendant, Kyle Nagy, who created the platform, remains at large. Reports indicate Nagy has fled to Russia.
The criminal trial was viewed by many as a test case for how Joseph Nocella, the interim U.S. Attorney for the district and a Donald Trump appointee who took office on May 5, would handle cases involving digital assets and fraud.
Karony’s conviction follows a series of legal actions against cryptocurrency executives. Former Celsius CEO Alex Mashinsky was recently sentenced to 12 years in prison after pleading guilty to fraud charges. Former FTX CEO Sam Bankman-Fried, who pleaded not guilty and went to trial, received a 25-year sentence following his 2023 conviction.
At the time of publication, Karony’s sentencing date had not yet been announced.
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