The U.S. Department of Justice 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 involving the misappropriation of investor funds. Safemoon filed for Chapter 7 bankruptcy in December 2023 after the U.S. Securities and Exchange Commission charged it and its executives with fraud.
Deceptive Liquidity Pool Promises
Prosecutors accused Karony and his co-conspirators of lying to Safemoon investors about the accessibility and use of the project's liquidity pool. They claimed the pool was "locked" and secure from manipulation, but in reality, the executives maintained secret access and siphoned funds for personal benefit. As Safemoon's market capitalization grew to over $8 billion, Karony fraudulently diverted and misappropriated millions of dollars' worth of liquidity.
Lavish Lifestyle Funded by Fraud
Federal officials revealed that Karony used the illicit gains to purchase multiple homes, sports cars, and custom trucks. He laundered the money through pseudonymous exchange accounts and private wallets. Investigators found he acquired over $9 million from the scheme, spending $2.2 million on a property in Utah, other residences in Utah and Kansas, and high-end vehicles including multiple Audi R8s, a Tesla, and custom Ford and Jeep trucks.
Legal Consequences and Deterrent Message
United States Attorney Joseph Nocella stated: “As proven at trial, 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.” Karony's sentencing date is yet to be set. His associate Thomas Smith has already pleaded guilty, while co-conspirator Kyle Nagy remains at large. The jury also issued a verdict to forfeit one residential property and the proceeds from the sale of another, totaling approximately $2 million. Karony faces up to 45 years in prison, sending a strong warning to the crypto industry.