PROVO — One of the winners of Utah Business’s 2022 CEOs of the Year was arrested for participating in a multi-million dollar international fraud scheme on Wednesday.
Braden John Karony, also known as “John Karony” and “CPT HODL T MUN,” 27, of Provo, Utah, was arrested in Provo for charges of conspiracy to commit securities fraud, conspiracy to commit wire fraud and money laundering conspiracy, according to a U.S. Attorney’s Office press release.
According to authorities, Karony is the CEO of SafeMoon LLC, a company that focuses on creating digital assets through a public blockchain, also known as cryptocurrency and non-fungible tokens.
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SFM token scheme
In March 2021, SafeMoon issued “SFM” tokens on the public blockchain for buyers to purchase with at least a 10% tax, according to the press release. The 10% tax was split up and distributed into SFM liquidity pools.
“In the months after its launch in March 2021, SFM grew to have more than one million holders and a market capitalization of more than $8 billion,” the press release stated.
According to authorities, Karony and two other defendants misled investors, claiming the liquidity pools were “locked” and would prevent a “rug pull”—a type of crypto fraud— from occurring.
“In reality, the defendants allegedly retained access to the SFM liquidity pools, and they used that access to intentionally divert and misappropriate millions of dollars’ worth of tokens from the SFM liquidity pools for their personal benefit,” the press release stated.
Authorities claim that the three defendants “repeatedly bought and sold SFM for their personal benefit, including at the height of SFM’s market price, which generated millions of dollars in profits.”
Authorities believe SafeMoon market capitalization grew to more than $8 billion.
According to the press release, the defendants used the money to buy luxury vehicles and real estate in New Hampshire, Utah, and Florida.
SafeMoon’s Chief Technology Officer, Thomas Smith, also known as “papa”, 35, of Bethlehem, New Hampshire, was also arrested for the same charges as Karony.
SafeMoon’s creator Kyle Nagy, also known as “Safemoon Dev,” 35, of Vero Beach, Florida, remains at large, according to authorities.
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