From crypto wallets to jail cells: SafeMoon execs nabbed

November 2, 2023 Rob Abruzzese
U.S. Attorney for the Eastern District of New York Breon Peace announced the arrest of a Brooklyn resident and two Russian nationals for their involvement in a scheme to evade U.S. export controls and sanctions.Photo: Andrew Harris/AP
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Federal authorities from the Eastern District of New York have charged founders and executives of SafeMoon LLC, with multiple counts of conspiracy, including securities fraud and wire fraud, according to an indictment unsealed Wednesday. 

The digital asset company, headed by Braden John Karony, Kyle Nagy and Thomas Smith, is accused of misappropriating investors’ funds to the tune of millions of dollars, allegedly for personal use that included purchasing luxury vehicles and real estate.

“As alleged, 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 U.S. Attorney Breon Peace.

The decentralized finance digital asset, SafeMoon, had promised users “locked” liquidity, a feature purported to protect investor assets. According to the indictment, Karony, Nagy, and Smith allegedly diverted these supposedly safeguarded funds for their personal benefit, even as SafeMoon’s market capitalization soared to over $8 billion.

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“Although this fraud scheme may be complex, the end result is simple —theft. Investors were assured their money would be safe, while the defendants allegedly misled investors and diverted millions of dollars to line their pockets and their driveways,” said IRS Special Agent-in-Charge Thomas Fattorusso.

Karony was arrested earlier Wednesday in Provo, Utah, and Smith in Bethlehem, New Hampshire, while Nagy remains at large. The indictment alleges that, contrary to public statements, the defendants retained control over the “locked” SafeMoon liquidity pools and systematically diverted funds for their personal benefit. Additionally, the defendants are accused of using private crypto wallet addresses and pseudonymous accounts to mask their fraudulent activities.

The charges are merely allegations, and the accused are presumed innocent until proven guilty. The case is being handled by the Office’s Business and Securities Fraud Section.


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