Coin Edition -
- The SEC has filed charges against the crypto and blockchain company SafeMoon, along with three of its executives.
- The defendants are accused of misappropriating more than $200 million in crypto assets.
- The CEO and CTO were allegedly involved in attempting to manipulate the market by making large purchases of SFM.
The U.S. Securities and Exchange Commission (SEC) has charged crypto and blockchain company SafeMoon, its founder Kyle Nagy, CEO John Karony, and Chief Technology Officer Thomas Smith for offering the unregistered sale of a crypto asset security, SafeMoon.
Today we charged SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies’ CEO, John Karony, and Chief Technology Officer, Thomas Smith, for perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon.— U.S. Securities and Exchange Commission (@SECGov) November 1, 2023
The SEC claimed that the defendants promised to take the price of the token “to the moon”; however, they allegedly withdrew crypto assets worth more than $200 million. Furthermore, the defendants were accused of misappropriating investors’ funds for personal use and to enrich themselves.
The Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit, David Hirsch, stated that while decentralized finance claimed to deliver transparency and predictable outcomes, unregistered offerings lack the disclosures and accountability that the law demanded. Additionally, Hirsch called Kyle Nagy a fraudster who enriches himself at the expense of others.
Nagy assured investors that funds were safely locked and could not be withdrawn while held in SafeMoon’s liquidity pool, per the SEC’s complaint. Nevertheless, allegedly, large portions of the liquidity pool funds were never locked, and the defendants used the funds to “purchase McClaren cars, extravagant travel, luxury homes, and other things.”
Furthermore, the SEC alleged that SafeMoon reached a market capitalization that exceeded $5.7 billion before its price plummeted by approximately 50% when the public became aware of the unlocked liquidity pools. After this, Karony and Smith allegedly attempted to manipulate the market by using misappropriated assets to make large purchases of SafeMoon to increase its price.
Lately, a few of the SEC’s controversial cases were against Coinbase (NASDAQ:COIN), Binance, and Ripple. A member of the crypto community shared that the SEC let SafeMoon “ponzi go on for two years while simultaneously suing legitimate projects.” Another person shared the same opinion and responded to the SEC, saying, “This is what you should have been doing instead of bringing a frivolous action against Coinbase.”
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