Braden John Karony, former SafeMoon CEO, has been convicted on all charges of conspiracy to commit securities fraud, wire fraud, and money laundering.
The conviction carries a possible prison sentence of up to 45 years.
Karony and his co-conspirators allegedly diverted "locked" liquidity pool funds for personal gain.
Co-conspirator Thomas Smith cooperated with prosecutors and testified against Karony, while Kyle Nagy remains a fugitive in Russia.
The SafeMoon case was once an $8 billion market cap project and has fallen far from its peak.
Braden John Karony, former CEO of SafeMoon, has been convicted on all charges related to an elaborate crypto fraud scheme.
According to the ruling from a New York federal jury, Karony is guilty of several crimes, including conspiracy to commit securities fraud, wire fraud, and money laundering.
Altogether, these charges together carry a prison sentence of up to 45 years.
Here’s what this ruling means and how it reflects major government efforts to crack down on financial misconduct within the crypto space.
Karony’s trial happened in the U.S. District Court for the Eastern District of New York under Judge Eric R. Komitee.
Jury selection began on 5 May, and within two weeks, the evidence prosecutors presented was enough to paint a damning picture of the defendant.
Despite Karony insisting that he was innocent throughout the proceedings, the jury was unconvinced.
Karony maintains innocence
According to courtroom reports, the panel took only a few hours to reach the guilty verdict on all three felony counts.
SafeMoon launched in 2021 like any other kind of crypto.
However, this cryptocurrency had a different selling point. SafeMoon took a 10% transaction fee on every token transfer, and half of that fee was supposed to be redistributed to existing holders.
The other half was to be locked in a liquidity pool, designed to support market stability
However, this liquidity pool was anything but secure.
According to federal prosecutors, Karony and his co-conspirators including former Chief Technology Officer Thomas Smith and project creator Kyle Nagy allegedly retained access to these supposedly “locked” funds.
Karony convicted
The “locked” funds were withdrawn behind the scenes and redirected for personal gain, to the tune of millions of dollars.
Karony and the others allegedly presented SafeMoon as a self-sustaining system, and directly stole from investors to finance a lavish lifestyle.
They bought everything from real estate, to luxury vehicles like an Audi R8 and custom Tesla trucks.
In total, Karony himself reportedly funneled over $9 million in crypto assets through this scheme.
To cover their tracks, Karony and the team even used anonymous wallets and unhosted accounts on centralized exchanges.
One of the conspirators, Thomas Smith cooperated with prosecutors and testified against Karony after pleading guilty.
His cooperation may earn him a reduced sentence, while Kyle Nagy, the third person in the scandal, is reportedly in Russia as a fugitive.
The charges against the trio were initially filed in 2023, and as the trial moved along, it became clear that the scam was much wider than anyone realised.
The SafeMoon case was closely watched by both the crypto industry and government regulators, considering its status as one of the biggest cases of digital asset fraud.
Interim U.S. Attorney Joseph Nocella declared:
“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 jury also ordered the forfeiture of one property and seized the proceeds from the sale of another, worth around $2 million.
At the height of its run, SafeMoon hit a market cap of over $8 billion and quickly became one of the most talked-about altcoins in the early 2021 bull market.
However, like many projects that soared too quickly, SafeMoon’s fundamentals didn’t match up to its valuation.
Questions started to arise about the team’s integrity and the nature of its operations.
The fraud allegations turned out to be the final nail in the coffin for Karony and the others.
Karony is just the latest in a long line of crypto executives to face serious legal issues.
For example, former Celsius CEO Alex Mashinsky was recently sentenced to 12 years in prison after pleading guilty to fraud and misleading investors.
Sam Bankman-Fried was also sentenced to 25 years after the FTX trial in 2023.
As of now, Karony has not yet been sentenced.
However, legal experts believe he could face decades behind bars, depending on the the sentence handed down.
Considering the scale of the fraud and the deliberate scam, Karony could be facing up to 45 years, alongside Thomas Smith who awaits conviction, and Kyle Nagy who remains at large.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.