Utah CEO of SafeMoon crypto company arrested on fraud charges

John Karony, 27, and two other company leaders lied to investors and lined their own pockets, federal officials claim.

Karony was arrested in Provo this week, according to the U.S. Attorney’s Office, and is scheduled to appear in federal court Wednesday in Salt Lake City for a bail hearing. Chief Technology Officer Thomas Smith, 35, was arrested in New Hampshire. Founder Kyle Nagy, 35, remains at large and has possibly fled the country, according to court documents filed Thursday.

Prosecutors have asked that Karony be held without bail, claiming he is a flight risk with family ties outside the country and could tamper with evidence if released. Simms has requested his release; in a petition filed Thursday, he argued “to think that Mr. Karony — who has no criminal history and no history of any substance abuse — would throw away his entire life to become a fugitive from justice strains credulity.

SafeMoon touted its model, which taxed any exchanges at 10% and held those funds in a purportedly locked pool, as a way to preserve and grow investment funds. Then, court documents said, an anonymous social media account warned on about April 21, 2021, that SafeMoon’s liquidity pool, or LP, wasn’t locked, as executives claimed. Founders owned more than half of the company’s liquidity and could “rug pull” — or, take the money and run, the account alleged, adding that the chance of losing invested funds was “absolute.”

An anonymous account on X, then Twitter, warned followers that SafeMoon owners could pull funds from the company's LP in April 2021, according to the SEC complaint“Within two weeks of the SafeMoon Token launch, Nagy had already redeemed LP tokens to transfer more than $500,000 worth of purportedly ‘locked’ retained assets from the SafeMoon LP to the SafeMoon Contract Owner Address under his control,” the complaint claims.

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