The U.S. Department of Justice (DOJ) announced on May 21 that Braden John Karony, CEO of digital asset firm Safemoon LLC, was found guilty by a federal jury in Brooklyn on all three counts in a crypto fraud case. The charges stemmed from a scheme that deceived investors about the accessibility and use of Safemoon’s liquidity pool, leading to the misappropriation of millions of dollars.
The Fraud: Lies About Locked Liquidity
Prosecutors proved that Karony and his co-conspirators repeatedly told investors that the Safemoon liquidity pool was “locked” and could not be accessed by the team, creating a false sense of security. In reality, the executives maintained secret control over the pool and systematically siphoned funds for personal enrichment. As Safemoon’s market capitalization swelled to over $8 billion, Karony diverted and misappropriated millions of dollars’ worth of liquidity. U.S. Attorney Joseph Nocella stated: “The Safemoon digital asset was anything but safe and turned out to be pie in the sky for investors who were deliberately misled by Karony, a man who sought to get rich quick by stealing and diverting millions of dollars.”
Lavish Spending and Money Laundering
Investigators revealed that Karony used the proceeds—totaling over $9 million—to fund an extravagant lifestyle. His purchases included a $2.2 million property in Utah, additional homes in Utah and Kansas, multiple Audi R8s, a Tesla, and custom Ford and Jeep trucks. To conceal the illicit gains, he laundered money through pseudonymous exchange accounts and private wallets. The fraudulent conduct involved deliberate concealment and manipulation of cryptocurrency transactions. While Karony awaits sentencing, his associate Thomas Smith has already pleaded guilty, and another co-conspirator, Kyle Nagy, remains at large.
Legal Outcome: Up to 45 Years and Asset Forfeiture
The trial lasted 12 days before U.S. District Judge Eric R. Komitee. The jury also ordered forfeiture of one residential property and the proceeds from the sale of another, totaling approximately $2 million. The DOJ noted that Karony faces up to 45 years in prison at sentencing. Nocella added: “Today’s guilty verdict should serve as a warning to all would-be fraudsters that my Office will vigorously prosecute individuals like the defendant who victimize digital asset investors and undermine investor confidence in digital asset markets.” Sentencing is scheduled at a later date.