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The U.S. Securities and Exchange Commission filed lawsuits against SafeMoon LLC (SAFEMOON-USD), its creator Kyle Nagy, SafeMoon US LLC, and the companies’ CEO, John Karony, and chief technology officer, Thomas Smith, alleging they engaged in fraud through an unregistered sale of a crypto asset security.
The U.S. Attorney’s Office for the Eastern District of New York filed a parallel criminal action that charges the same defendants with conspiracy to commit wire fraud and money laundering.
The SEC alleges that the defendants “promised to take the price of the token ‘Safely to the moon,’ but instead of delivering profits, they wiped out billions in market capitalization, withdrew crypto assets worth more than $200M from the project, and misappropriated investor funds for personal use.”
The SEC complaint said that SafeMoon (SAFEMOON-USD) soared in price by more than 55,000% from March 12 to April 20, 2021 and reached a market capitalization of more than $5.7B before its price plummeted by almost 50% when the public learned on April 20, 2021 that the token’s liquidity pool wasn’t locked as claimed. The regulator alleges that Karonty and Smith misappropriated assets to make large purchases of SafeMoon to prop up its price.
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