SEC Charges SafeMoon and Executives for $200 Million Crypto Fraud

Published: Nov 1, 2023
Written By:
Vignesh Karunanidhi
Milk Road Writer

The US Securities and Exchange Commission (SEC) charged crypto firm SafeMoon, its founder, and executives on Thursday for perpetrating an alleged $200 million fraud through unregistered token sales.

According to the SEC complaint, SafeMoon and its leaders falsely promised investors they would safely lock liquidity pool funds. However, they allegedly misappropriated millions to fund lavish lifestyles.

SafeMoon price crashed Over 50%

The SEC alleged in the complaint that the SafeMoon token surged over 55,000% from March 12 to April 20, 2021, reaching a market capitalization above $5.7 billion.

But the price plunged nearly 50% on April 20 when investors learned the vaunted liquidity pool locking never occurred. In addition, the SEC alleges executives then manipulated the market to prop up prices.

The company’s founder, Kyle Nagy, assured pool funds were locked and untouchable. Additionally, the SEC claims large portions were never locked.

Over $200 million was withdrawn to buy McLarens, luxury homes, and more, according to the SEC’s allegations. CEO John Karony also allegedly wash-traded SafeMoon to simulate market activity.

The SEC charged SafeMoon, Nagy, Karony, and Chief Technology Officer Thomas Smith with:

  • Violating securities registration provisions by not registering the SafeMoon token sale
  • Committing fraud by making false claims to investors regarding liquidity locking and misappropriating funds
  • Manipulating the market through wash trading and other tactics

The charges were filed in the US District Court for the Eastern District of New York.

“We urge investors to continue to exercise extreme caution in this space, as fraudsters exploit the popularity of crypto assets to promise astronomical profits while all too frequently only delivering a crash landing.”

SEC Crypto Assets and Cyber Unit Deputy Chief Jorge Tenreiro

The SEC charged defendants under the Securities Act of 1933 and the anti-fraud provisions of the Securities Exchange Act of 1934.

Vignesh Karunanidhi
Milk Road Writer
Vignesh has been a seasoned professional in the crypto space since 2017. He has been writing for over 5 years and specializes in writing and editing various types of crypto content, including news articles, long-form pieces, and blog posts, all focused on sharing the beauty of blockchain and crypto.