SafeMoon’s CEO, John Karony, and CTO, Thomas Smith, have been accused by the SEC of participating in a massive fraudulent operation involving the unregistered sale of the crypto asset security SafeMoon. SafeMoon’s founder, Kyle Nagy, has also been named in the SEC’s legal complaints. According to the SEC’s allegations, the defendants promised to price the token to the moon securely. Instead of returning funds to investors, they misappropriated them, destroyed crypto assets valued at over $200 million, and wiped off a significant portion of the project’s market cap.
According to David Hirsch, chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit (CACU), decentralized finance is characterized by clarity and calculated outcomes. In the case of uncertified offerings, the law does not mandate any specific disclosures or responsibilities. They are able to attract the attention of fraudsters like Kyle Nagy, who steal the property of others.
As the allegations state, Nagy promised investors their money would be safe and inaccessible during the SafeMoon Token’s promotion. The defendants allegedly embezzled a large sum of money to support their extravagant lives because large parts of the liquidity pool were not safeguarded.
As for the Deputy Chief of the CACU, Jorge G. Tenreiro, he has advised investors to remain careful since embezzlers make use of the demand for crypto assets by promising enormous profits and not doing so in the end.
According to SEC allegations, SafeMoon increased its prices by over 55,000% between March 12 and April 20, 2021. Following a rise in market capitalization to over $5.7 billion, the price dropped by nearly 50%. All of this transpired after the public learned on April 20, 2021, that SafeMoon’s liquidity pool had not been blocked, as had been suggested. Following the sinking, Karony and Smith used the embezzled funds to purchase enormous quantities of SafeMoon to increase prices and influence the market. Karony engaged in wash trading, which is the purchasing and selling of SafeMoon on a trading platform to demonstrate market traction.
The SEC has filed a lawsuit in the U.S. District Court, alleging that the defendants broke the Securities Act of 1933 and the Securities Exchange Act of 1934 by engaging in fraudulent conduct related to the sale of securities.
John Lucas carried out the investigation on behalf of the SEC with assistance from Pamela Sawhney, John Crimmins, John Marino, and Sejal Bhakta. Deborah A. Tarasevich, Tenreiro, and Hirsh supervised the investigation. Oren Gleich and Dean M. Conway, supervised by James Connor, will head up the SEC’s legal efforts in court. The SEC highly regards the help extended by the U.S. Attorney’s Office for the Eastern District of New York, which initiated the filing of a similar criminal action along with the FBI.
Source: https://www.cryptonewsz.com/sec-charges-safemoon-with-fraud-and-unlicensed-crypto-securities/