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SafeMoon executives were charged with a $200 million crypto fraud by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
“The defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles, and real estate,” said Breon Peace, U.S. Attorney for the Eastern District of New York, in a statement.
Popping up on the SEC’s Radar
While facing criminal charges, the defendants were also charged for securities violations by the U.S. Securities and Exchange Commission (SEC). The SafeMoon executives stand accused of violating the registration and anti-fraud provisions of the Securities Act of 1933, as well as the anti-fraud provisions of the Securities Exchange Act of 1934.
SafeMoon’s CEO, John Karony, and the project’s Chief Technology Officer Thomas Smith, were arrested, according to the DOJ. Kyle Nagy, SafeMoon’s creator, still remains at large.
SafeMoon Investor Funds Drained
The arrests come after the executive team withdrew more than $200 million belonging to SafeMoon investors, said the SEC in a complaint filed yesterday. SafeMoon’s price fell more than 30% yesterday shortly after the SEC’s filing.
The SafeMoon team also allegedly used funds that they assured investors were locked up in liquidity pools to manipulate SafeMoon’s price.
Even though the executives denied that they had personally held SafeMoon tokens, the SEC discovered that they had repeatedly traded the tokens for their own benefit – generating millions in profits in the process.
The Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit, David Hirsch, said that “unregistered offerings lack the disclosures and accountability that the law demands, and they attract scammers like Kyle Nagy, who use these vulnerabilities to enrich themselves at the expense of others.”
The executive team then attempted to mask the proceeds through various private unhosted wallets and pseudonymous accounts on exchange platforms, the DOJ said.
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