Safemoon CEO Faces 45 Years in Prison After Conviction for Defrauding Investors
The U.S. Department of Justice (DOJ) has formally found Braden John Karony, CEO of Safemoon LLC, guilty in a massive digital asset fraud that resulted in massive losses for thousands of investors. Karony was convicted on three federal charges of misappropriating funds from a liquidity pool and laundering the money to fund his and his co-conspirators’ lavish lifestyles.
According to the indictment, Karony and his associates intentionally misled investors into believing that Safemoon’s liquidity pool – a key mechanism that was promoted as “locked” and inaccessible – was actually under the control of the board. While the community believed in the security of the system, Karony secretly siphoned millions of dollars from the pool for his own personal use.
“As Safemoon’s market capitalization surpassed $8 billion, the defendants exploited the trust of investors to commit millions of dollars,” the Justice Department said.
The trial, which lasted more than 12 days in Brooklyn federal court, presided over by Judge Eric R. Komitee, ended with a guilty verdict for Karony. He now faces a maximum sentence of up to 45 years in prison. The court also ordered the forfeiture of several related real estate assets, including a home worth about $2 million.
According to prosecutors, Karony used anonymous exchanges and personal wallets to launder money, in order to hide the traces of fraudulent transactions. In total, more than $9 million of the misappropriated money was used to buy real estate in Utah and Kansas, as well as a series of luxury vehicles such as an Audi R8, Tesla, and customized Ford trucks and Jeeps.
“Safemoon is not the safe digital asset it was advertised to be. Instead, it is a carefully orchestrated trap designed to illegally profit from a gullible public,” said U.S. Attorney Joseph Nocella. “Today’s sentence should serve as a warning to anyone who conspires to abuse the digital asset market for personal gain.”
While Karony awaits sentencing, a co-defendant, Thomas Smith, has pleaded guilty and is cooperating with the investigation. Another of the group, Safemoon co-founder Kyle Nagy, remains at large.
The case marks a significant step forward in law enforcement’s crackdown on fraud in the cryptocurrency space, a fast-growing industry that can also pose significant risks to investors if left unregulated.