The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit in the Eastern District of New York, accusing the cryptocurrency company SafeMoon LLC and its founders Kyle Nagy, SafeMoon US LLC, CEO John Karony, and CTO Thomas Smith of conducting a large-scale fraudulent scheme involving the unregistered cryptocurrency asset SafeMoon. The charges include securities fraud, wire fraud, and conspiracy to commit money laundering.
The SEC alleges that the defendants promised to pump up the token's price but instead wiped out billions in market value, withdrew more than $200 million worth of cryptocurrency assets from the project, and misappropriated investor funds for personal use.
The U.S. Attorney's Office for the Eastern District of New York has announced the arrests of John Karony and Thomas Smith earlier today.
SafeMoon's price skyrocketed over 55,000% from March 12 to April 20, 2021, reaching a market cap of $5.7 billion. However, when the public learned on April 20, 2021, that SafeMoon's liquidity pool was not locked as claimed, its price dropped nearly 50%.