An indictment unsealed by the US Department of Justice, had charged executives of SafeMoon with conspiracy to commit wire fraud, conspiracy to commit securities fraud, and money laundering.
The executives who were charged with the said crimes were Thomas Smith, Kyle Nagy, and Braden John Karony.
According to prosecutors, Nagy was still at large, but they had arrested Smith and Karony, the former from Bethlehem, New Hampshire, and the latter from Provo, Utah.
The SEC
This news came on the same day that civil charges were filed by the Securities and Exchange Commission (SEC) against SafeMoon as well as its executives.
The regulatory body accused them of operating a huge fraudulent scheme that resulted in losses worth billions for investors.
Introduced in March 2021, SafeMoon became popular because it offered investors half of the 10% transaction fee.
Data from CoinGecko shows that SafeMoon had reached its peak in January 2022, when its price had touched $0.00338272.
However, it has declined since then and news of the SEC’s civil charges and the DOJ’s indictment saw its value plunge to $0.00019274.
The indictment
The DOJ’s indictment stated that the defendants had lied to SafeMoon investors regarding its use of ‘locked’ liquidity was inaccessible to them.
In addition, they had also lied about their trading and personal holding of SafeMoon. The market capitalization of the token had reached $8 billion.
According to the DOJ, the executives had misappropriated and fraudulently diverted the ‘locked’ liquidity worth millions of dollars for their benefit.
Federal prosecutors said that these benefits included the purchase of real estate, luxury vehicles, and personal investments.
The prosecutors added in their indictment that Smith had purchased a custom Porsche 911 sports car worth $860,000.
The DOJ
In a press release, US Attorney Breon Peace said that investors had been deliberately misled and the defendants had diverted millions of dollars in their greedy scheme to enrich themselves.
This included the purchase of the aforementioned Porsche as well as other luxury vehicles and real estate.
The DOJ also asserted that SafeMoon executives had masked their activities with the use of pseudonymous centralized exchange accounts and complex transaction routing.
Karony had been arrested in Utah, while Smith had been picked up in New Hampshire, but Nagy remains free for now.
If the defendants are convicted, they could be sentenced to about 25 years in prison. It should be noted that the three executives have not issued any public statements on the said charges.
The DOJ and the SEC are continuing with their respective investigations into SafeMoon. Investors have been told to exercise caution when they are investing in crypto.