A system for embezzlement was constructed by former SafeMoon CEO Braden Karony, through which investor funds were funneled using a network of pseudonymous wallets, and the resulting proceeds were laundered.
Former SafeMoon executive Braden John Karony was convicted on all counts by a federal jury in connection with a cryptocurrency fraud scheme in which millions were siphoned from investors through misleading assurances of decentralized finance security.
Karony was found guilty by the jury on charges of conspiracy to commit securities fraud, wire fraud, and money laundering following a 12-day trial held in Brooklyn on May 21.
Karony was accused by prosecutors of deceiving investors regarding the security of SafeMoon’s locked liquidity pools, while the funds were being secretly accessed and diverted to purchase luxury properties and vehicles.
Karony is now facing a potential prison sentence of up to 45 years. Approximately $2 million in real estate assets connected to the scheme were also ordered to be forfeited by the jury. His sentencing has been scheduled for later this year.
Meanwhile, a guilty plea had previously been entered by co-conspirator Thomas Smith, who is also awaiting sentencing. The third alleged participant, Kyle Nagy, has not yet been apprehended and remains at large.
Meanwhile, the SafeMoon project has been taken over by the community and has been rebranded as a memecoin.
Karony Found Guilty in $200M Crypto Fraud Scheme
SafeMoon was launched in March 2021 by Karony and his co-conspirators, and it was marketed as a secure decentralized finance (DeFi) token featuring a self-sustaining liquidity mechanism.
It was claimed by the founders that a 10% tax on each transaction would be used to reward holders and enhance market liquidity through funding locked pools. In practice, however, full access to those liquidity pools was retained by Karony, and millions of dollars were funneled into personal accounts.
The misappropriated funds were used by him to acquire a $2.2 million residence in Utah, additional properties in Kansas, two Audi R8 vehicles, a Tesla, and several customized trucks.
According to a statement issued by U.S. Attorney Joseph Nocella:
Karony didn’t build a safe financial product — he built a pipeline for theft. He looted investor funds and used them to fill his garages and bankroll his lifestyle.
The misappropriated assets were traced by agents from the IRS-Criminal Investigation, FBI, and Homeland Security Investigations through a complex network of pseudonymous wallets and centralized exchange accounts.
Crypto Fraud Unraveled Through Complex Digital Trail
The digital trail was followed by IRS-CI and its cyber and J5 task forces, revealing how the funds had been laundered by Karony. The cross-border operation was dismantled through collaboration with enforcement partners from Australia, Canada, the Netherlands, and the UK.
A statement was issued by IRS-CI Special Agent in Charge Harry T. Chavis, Jr., who remarked:
Karony lined his driveways with sports cars while deceiving millions. We tracked his crypto movements and exposed the scheme for what it was — outright theft.
It was confirmed by the FBI and HSI that Karony’s personal trades of SafeMoon had been concealed during peak price periods, allowing illicit profits to be generated while public assurances were being made that no insider manipulation of the token was occurring.
