Breaking: SafeMoon price crashes 30% after SEC charges its team with committing fraud

SafeMoon, a Defi cryptocurrency, along with its creator Kyle Nagy as well as the CEO John Karony, and CTO Thomas Smith, have been charged by the Securities and Exchange Commission (SEC) for "perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security".

SafeMoon team charged by SEC

The SEC, in the press release, stated,

"[SafeMoon] promised to take the price of the token "Safely to the moon," but instead of delivering profits, they wiped out billions in market capitalization, withdrew crypto assets worth more than $200 million from the project, and misappropriated investor funds for personal use.

The regulator alleged that through wash trading, the CEO created the impression of market activity by buying and selling the token on a trading platform. 

This was preceded by fraudulently manipulating the value of the token by pumping it into the market back in April 2021 after users learned that SafeMoon's liquidity pool was not locked as claimed, which led to cryptocurrency's price plummeting by 50% from a market capitalization of $5.7 billion.

SafeMoon price witnessed a 30% crash at the time of writing following the release of the news to trade at $0.0001350.

SFM/USD 1-day chart

SafeMoon team under arrest

The CEO of SafeMoon, Karony, along with the CTO, Smith, had been arrested by the US government at the time of writing. The US Attorney's Office charged the team with misappropriating millions of dollars of investors' funds for their own use. This included the purchase of luxury vehicles and real estate in New Hampshire, Utah, and Florida. 

Additionally, the CTO sent 2,900 Binance Coin (BNB) worth more than approximately $860,000 in order to purchase a custom Porsche 911 sportscar along with some NFTs. Ivan J. Arvelo, Special Agent in Charge of Homeland Security Investigations, New York, following the arrest, stated,

"As alleged, SafeMoon's executives grew their company value to over $8 billion, but instead of rewarding their clients as promised, their insatiable greed led them to spend millions of dollars on their own lavish desires. HSI New York will relentlessly pursue individuals who seek to exploit investors and the American financial system for their own gain.