Braden Karony Found Guilty of Fraud in SafeMoon Case
Braden John Karony, the chief executive of SafeMoon, a prominent crypto and blockchain firm, has been convicted on all charges in a three-count indictment concerning securities fraud, wire fraud, and money laundering. The jury reached its decision today at a federal court in Brooklyn after a trial that lasted 12 days.
Charges Related to SafeMoon Misconduct
The indictment arose from allegations that Karony was involved in deceiving investors in SafeMoon, a decentralized finance (DeFi) cryptocurrency created by his company, SafeMoon LLC. Prosecutors contended that Karony and his associates misrepresented critical information regarding investor access to the liquidity pool and the intended use of these funds. With SafeMoon’s market capitalization exceeding $8 billion, Karony reportedly misappropriated millions from the liquidity pool for his personal gain. After his conviction, Karony faces the possibility of a prison sentence that could extend to 45 years. Additionally, the jury mandated the forfeiture of a residential property and proceeds from another, totaling around $2 million.
Government Officials Criticize Karony’s Actions
U.S. Attorney Joseph Nocella, Jr. strongly denounced Karony’s conduct, asserting, “The SafeMoon digital asset was anything but safe and turned out to be pie in the sky for investors who were deliberately misled.” Nocella highlighted that Karony utilized the misappropriated funds to support a lavish lifestyle, which included purchasing multiple luxury homes and high-end vehicles.
Collaborative Investigation by Multiple Agencies
The investigation was a joint effort involving various federal agencies, including the FBI and IRS. FBI Assistant Director Christopher G. Raia stated, “Karony violated his clients’ trust and wallets while attempting to conceal his misconduct through discrete transactions.” IRS Special Agent in Charge Harry T. Chavis, Jr. emphasized the significance of tracking cryptocurrency transactions to ensure accountability for wrongdoers, remarking, “The name of his company is SafeMoon, but there was nothing safe about this investment.”
Misrepresentation and Misuse of SafeMoon Tokens
SafeMoon tokens, launched in March 2021, operated on a public blockchain with a 10% tax applied to every transaction. This tax was purportedly intended to benefit both token holders and the liquidity pool, with half returned to holders and the other half deposited into liquidity reserves. Initially, SafeMoon attracted millions of investors, leading to a market cap that surpassed $8 billion. However, prosecutors detailed how Karony and his team misrepresented vital aspects of the SafeMoon initiative, falsely asserting that liquidity pools were “locked” to prevent fraud and that tokens would only be used for legitimate business activities. In reality, they maintained access to these funds, siphoning millions for personal purposes while publicly claiming they did not personally trade SafeMoon.
Complex Schemes to Conceal Fraudulent Activities
Karony’s fraudulent actions included utilizing several cryptocurrency wallets and intricate transaction pathways to obscure the movement of stolen assets. Reports indicate that he generated over $9 million through these illicit endeavors, which he funneled into extravagant purchases, including a $2.2 million residence and luxury vehicles such as Audi R8 sports cars and tailored trucks.
