A U.S. federal judge has sentenced Braden John Karony, the former CEO of the defunct cryptocurrency project Safemoon, to 100 months in federal prison for defrauding investors. The sentence was handed down by District Judge Eric Komitee in the Eastern District of New York on February 11, 2026, following Karony's conviction on charges of conspiracy to commit securities fraud, wire fraud, and money laundering. In addition to the prison term, Karony was ordered to forfeit approximately $7.5 million and two residential properties. The court will determine the final amount of victim restitution at a later date.
The Fraud Scheme: Fake Liquidity and Insider Trading
Prosecutors proved during a three-week trial in May 2025 that Karony and his co-conspirators diverted more than $9 million from Safemoon's liquidity pools to fund an extravagant lifestyle. The stolen funds were used to purchase a $2.2 million mansion in Utah, high-end sports cars including an Audi R8 and a Tesla, and several custom trucks. Safemoon gained notoriety in early 2021, reaching a market capitalization of over $8 billion. The token utilized a unique smart contract that applied a 10% tax on every transaction. Investors were told this tax was split, with 5% distributed to existing holders and 5% deposited into locked liquidity pools to ensure market stability. However, the locked status was a fabrication. Karony and his co-conspirators retained access to these pools, using complex transaction routing and un-hosted wallets to mask the theft of millions. While publicly denying they traded the token, the defendants frequently sold Safemoon at its peak for personal profit. One of the co-conspirators, Thomas Smith, pleaded guilty to charges in February 2025.
Multi-Agency Investigation and Prosecution
“Karony lied to investors from all walks of life—including military veterans and hardworking Americans—and defrauded thousands of victims in order to buy mansions, sports cars, and custom trucks,” stated United States Attorney Joseph Nocella, Jr. The investigation involved a multi-agency effort, including the FBI, IRS-CI, and Homeland Security Investigations (HSI). “The expertise of IRS-CI special agents in tracing financial transactions outmatched Karony’s intricate schemes,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr. “His game of hide-and-seek failed, and now he must face justice.” HSI Acting Special Agent in Charge Michael Alfonso echoed the sentiment, noting that the scheme exploited the faith of over a million victims. “HSI New York… will continue to work tirelessly to ensure those who exploit the trust of investors—whether through fiat or cryptocurrency—will face justice.”
Impact and Industry Warning
The case is one of the most significant fraud convictions in the DeFi sector, highlighting structural risks in decentralized finance projects. Safemoon's rise and fall—from an $8 billion market cap to complete collapse—serves as a cautionary tale for the entire crypto industry. Investors are urged to scrutinize the authenticity of liquidity locks and team disclosures before participating in similar projects. The sentencing sends a clear message that even complex crypto fraud schemes will be thoroughly investigated and prosecuted.
FAQ
- Who is Braden John Karony? Former CEO of Safemoon, convicted of defrauding investors.
- What sentence did he receive? 100 months in federal prison plus forfeiture of $7.5M and two homes.
- How did he defraud investors? Diverted over $9M from Safemoon liquidity pools for personal luxury spending.
- What was Safemoon's peak? $8 billion market cap in early 2021, before collapsing amid fraud revelations.