Once a meme coin that gained popularity in 2021-2022, SafeMoon is now facing a series of fraud allegations from four U.S. regulatory agencies, and the project’s team is also entangled in legal trouble.
In the latest announcement on November 1st, various U.S. federal agencies, including the Federal Bureau of Investigation (FBI), the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), and the U.S. Department of Justice’s Eastern District of New York Office, have filed charges and arrested individuals behind SafeMoon (SFM).
Specifically, three key leaders of SafeMoon, including founder Kyle Nagy, CEO Braden John Karony, and CTO Thomas Smith, are being accused of conspiracy to commit securities fraud, conspiracy to commit wire fraud, and conspiracy to launder money. Braden John Karony and Thomas Smith have been arrested, while Kyle Nagy remains at large.
On the same day as the arrests, the SEC filed a lawsuit against SafeMoon and its executives, alleging a large-scale fraud scheme that resulted in billions of dollars in losses for investors. Additionally, the SEC claims that the SFM token is a disguised security and that the founders’ actions constituted unlawful securities offerings.
Prior to these legal actions, the three defendants had misled investors by claiming that they could not access locked SFM tokens, which turned out to be false. When SafeMoon’s market capitalization reached $8 billion, the founders allegedly sold their locked tokens for personal gain, amassing over $200 million, according to the DOJ’s allegations.
Furthermore, the project’s team used these funds to buy SFM tokens on the market, driving up the token’s price and engaging in various manipulative tactics. SafeMoon had also faced previous rumors of price manipulation.
Following this news, SafeMoon’s SFM token lost over 65% of its value. At the time of writing, SFM is trading around $0.00009, a significant decrease from its all-time high of $0.00338.