John Karony, 27, and two other company leaders lied to investors and lined their own pockets, federal officials claim.
Federal prosecutors have charged the men with criminal securities fraud conspiracy and wire fraud conspiracy in New York District Court; the Securities and Exchange Commission has separately charged them with fraud and selling unregistered crypto securities. Clayton Simms, Karony’s attorney, said in an interview that his client is “completely and totally innocent” of criminal charges unless and until proven guilty. Karony “absolutely looks forward to defending himself,” Simms said. “An indictment is just the first step, not a conviction.”
According to the SEC’s complaint, SafeMoon executives told buyers that when they traded tokens, 10% would be “taxed,” or withheld, for at least four years. The taxed funds would be held in a purportedly locked pool, which would ensure the tokens’ long-term viability, SafeMoon claimed. SafeMoon told investors the pool would grow and add value for buyers.
The company experienced a meteoric rise, growing to more than $5.7 billion in market value between March 12 and April 20, 2021. But a third-party audit that became public also cautioned that executives’ control of the company LP was a “major risk” that could “have devastating consequences to the project as a whole,” according to court documents.
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