Prosecutors in New York have reaffirmed their commitment to proceed with the trial of SafeMoon CEO Braden John Karony, despite recent guidance from the US Department of Justice (DOJ) aimed at reducing certain enforcement actions related to cryptocurrency. This announcement further complicates Karony’s legal situation, particularly after he was unable to continue with his previous legal representation due to financial constraints related to attorney fees.
Crypto-Friendly Memo Fails To Save Karony From Trial
On April 7, US Deputy Attorney General Todd Blanche released a memo instructing prosecutors to retract lawsuits related to digital assets that could be seen as “regulation by persecution.” This move is part of a broader shift towards more crypto-friendly policies under the administration of former President Donald Trump. However, in a court document filed on April 18, John Durham, the Attorney General for the Eastern District of New York, confirmed that his office intends to uphold all charges against SafeMoon’s John Karony after a thorough internal review following Blanche’s memo.
In November 2023, the Eastern District of New York indicted Karony along with two other prominent figures from SafeMoon LLC—Kyle Nagy and Thomas Smith—accusing them of orchestrating a fraudulent scheme that amassed over a hundred million dollars. The trio had launched the SafeMoon (SFM) token, enticing investors with promises of significant future returns. However, they allegedly misled investors about the actual integrity of the SFM lock liquidity feature.
As investments in SFM escalated, the executives are accused of improperly diverting approximately $200 million in user funds and accessing supposedly locked SFM tokens for personal expenditures. The US Securities and Exchange Commission (SEC) has initiated a separate action against the SafeMoon executives, alleging that they engaged in price manipulation following a decline in token value due to investors uncovering the fraudulent activities.
SafeMoon CEO Could Face Lengthy Prison Sentence
John Karony, along with the other accused parties, is facing serious charges, including conspiracy to commit securities fraud, money laundering, and wire fraud. Karony and Smith were apprehended in Utah and New Hampshire, respectively, while Smith remains unaccounted for. Karony’s initial legal team, Petrillo Klein & Boxer, had secured a $3 million bond but subsequently withdrew from the case due to the defendant’s financial inability to pay for their services. As a result, Karony is expected to continue his defense with new representation appointed through the Criminal Justice Act.
Under US law, a single count of wire fraud or money laundering can lead to a maximum prison sentence of 20 years, while a conviction for securities fraud could result in up to five years. Should Karony be found guilty on all counts, he faces the possibility of a cumulative sentence exceeding 40 years in federal prison.
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