The SEC claims that Karony and Smith misappropriated funds in order to manipulate the price of SAFEMOON coins.
The US Department of Justice (DOJ) has filed suit against SafeMoon’s management team, claiming that they perpetrated widespread fraud against the project’s financiers. This matter has also received attention from the Securities and Exchange Commission (SEC), which commenced proceedings on the same day. The SAFEMOON token’s securities sales are also being investigated by the SEC.
The DOJ detained SafeMoon’s CEO John Karony and CTO Thomas Smith on Wednesday, November 1. The SEC has filed a lawsuit against the SafeMoon management team, alleging that they stole over $200 million from the project and used it for their own benefit. U.S. Attorney for New York’s Eastern District Breon Peace commented on the new information.
To enrich themselves, the defendants reportedly bought a special Porsche sports car, as well as other expensive cars and real estate, using the millions of dollars they stole from their investors.
Three individuals, 35-year-old “Safemoon Dev” Kyle Nagy, 27-year-old “CPT_HODL_T_MUN” John Karony, and 35-year-old “papa” Thomas Smith, also known as “papa,” are charged with securities fraud, wire fraud, and money laundering conspiracy. The DOJ cited an incident in which Smith was accused of misappropriating tokens to purchase a Porsche 911 for personal use.
SAFEMOON’s market capitalization surpassed $5 billion on April 20, 2021, after it saw a spectacular 55,000% increase in value between March 12 and that date. After flaws were discovered in the smart contract’s code, however, its value fell. During this time, the Justice Department claims the market cap increased to $8 billion.
The accused are facing criminal accusations as well as securities violations investigations by the SEC. The SEC claims that Karony and Smith misappropriated funds in order to manipulate the price of SAFEMOON coins. Wash trading charges have also been made against Karony.
Crypto Assets and Cyber Unit (CACU) Chief David Hirsch of the SEC Enforcement Division stated: “Scammers like Kyle Nagy take use of the absence of protections in unregistered offers by taking advantage of the lack of disclosures and responsibility required by law.”
The organization has also made allegations against the three people. The SEC said they took part in a massive fraud conspiracy by selling the cryptocurrency security without first registering it.
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