A federal jury in the Eastern District of New York convicted former SafeMoon CEO Braden Karony on May 21 of conspiracy to commit securities fraud, wire fraud and money laundering after a 12-day trial that began on May 5.
He now faces up to 45 years in prison and the forfeiture of illicit gains.
Prosecutors detailed how Karony and his co-conspirators misled investors about the SafeMoon token design, falsely claiming that its liquidity pools were “locked” by a 10% transaction tax, that insiders could not perform a “rug pull,” and that tokens would serve only business purposes rather than personal enrichment.
They also assured buyers that developers did not hold or trade SFM tokens, and that the team would manually add token pairs to the pool when trades occurred on major exchanges.
In reality, the defendants retained full access to the liquidity pools. Consequently, they diverted millions of dollars’ worth of SFM tokens for their own profit.
$2.2M Utah Home Among Assets Bought with Fraud Proceeds
Prosecutors say the defendants repeatedly bought and sold tokens at market peaks. Moreover, they routed proceeds through private wallets and pseudonymous accounts.
As a result, Karony alone netted over $9m. He used those funds to buy a $2.2m home in Utah and additional properties in Utah and Kansas. He also purchased a $277,000 Audi R8, another Audi R8, a Tesla, and custom Ford F-550 and Jeep Gladiator trucks.
Co-defendant Thomas Smith testified against Karony after pleading guilty and could receive a lighter sentence, while platform creator Kyle Nagy reportedly fled to Russia and remains at large. The jury also ordered forfeiture of one residential property and the proceeds from another, totalling about $2m.
‘Pie in the Sky’ Ruling Highlights Investor Betrayal
The Justice Department’s business and securities fraud section is handling the case. Additionally, Assistant US Attorneys Dana Rehnquist, Sara Winik and Jessica Weigel are leading the prosecution. Meanwhile, Assistant US Attorney Laura Mantell is overseeing forfeiture matters. They are supported by paralegal specialists Asher Martin-Rosenthal and Madison Bates.
“At trial, we proved that the SafeMoon digital asset was anything but safe and turned out to be pie in the sky for investors,” said US Attorney Jaqueline Romero Nocella. “Karony used his scheme to purchase homes, sports cars, custom trucks, and other luxury goods. This verdict should warn fraudsters that we will vigorously prosecute those who prey on digital-asset investors.”
Karony’s trial followed the January sentencing of former Celsius CEO Alex Mashinsky to 12 years in prison after a guilty plea, and the 25-year term handed to former FTX chief Sam Bankman-Fried in 2023.
Those cases, alongside Wednesday’s verdict, point to the Justice Department’s intensified focus on digital asset markets and signal that executives who breach investor trust will face severe penalties.
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