SafeMoon CEO sentenced to 8 years in prison

In a ruling that sets a precedent in the prosecution of financial crimes within the decentralized finance (DeFi) ecosystem, US federal judge Eric Komitee sentenced Braden John Karony, CEO of SafeMoon US LLC, to 8 years and 4 months in prison.

Karony, 29, was found guilty of conspiracy to commit securities fraud, wire fraud and money laundering, after a scheme that affected thousands of users of its digital currencySFM.

According to official information from the United States Department of Justice (DoJ), the SafeMoon manager used his position to embezzle more than $9 million in digital assets. These funds, which were to guarantee the liquidity of the protocol, were diverted to afford an opulent lifestyle which included mansions and high-end sports vehicles, according to the conviction.

CEO accused of purchasing with stolen funds a $2.2 million home in Utahas well as vehicles like an Audi R8 and custom trucks.

SafeMoon was launched in March 2021 on the BNB Chain network, presenting itself as a community-driven digital asset. The protocol implemented a 10% “tax” on each transaction. Of that, half was distributed among token holders and the other half went to a supposedly “locked” liquidity pool.

However, FBI and IRS-CI investigations demonstrated that Karony and his accomplices maintained access to these funds. According to prosecutors, the defendants repeatedly assured that liquidity was protected against a rug pull (abrupt withdrawal of funds by developers), when in reality they used that access to extract millions of dollars.

«Karony lied to investors from all walks of life and defrauded thousands of victims to buy mansions and sports cars,» stated Joseph Nocella, Jr., United States Attorney for the Eastern District of New York. The jury determined that, in addition to the prison sentence, Karony must hand over $7.5 million and several residential properties.

Despite Karony’s attempts to hide the money trail by using private wallets and complex routes through pseudonymous exchange houses, Cybercrime specialists managed to reconstruct financial movements.

SafeMoon’s impact on the market was significant in 2021, with the SFM cryptocurrency reaching a capitalization of 8,000 million dollars. However, the price of that asset has plummeted by 99% since 2022, as seen in the following graph, and its capitalization has had the same fate.

However, the case reinforces regulators’ stance on the risks in projects that lack the transparency and decentralization that defines technologies like Bitcoin.

While Karony begins his sentence, his collaborator Thomas Smith awaits sentencing after pleading guilty in February 2025. For his part, the third person involved, Kyle Nagy, remains a fugitive from justice.