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New York prosecutors have stated intentions to proceed with the trial of SafeMoon CEO Braden John Karony, despite a recent directive by the US Department of Justice (DOJ) to scale back certain types of crypto enforcement actions. This development adds another layer to Karony’s troubles after the defendant lost his private counsel service due to insufficient funds to cover the legal fees.
Crypto-Friendly Memo Fails To Save Karony From Trial
On April 7, the US Deputy Attorney General Todd Blanche issued a memo directing prosecutors to abandon all digital assets-related lawsuits targeted at “regulation by persecution”. This action aligned with the broader crypto-friendly policies being implemented by the administration of US President Donald Trump.
In a recent court filing on April 18, John Durham, the Attorney General for the Eastern District of New York, affirmed his office’s commitment to maintain all charges against SafeMoon executive John Karony after conducting an internal review of the case following the memo from Deputy Attorney General Blanche.
In November 2023, the Eastern District of New York announced an indictment against Karony alongside two other key personnel in SafeMoon LLC – Kyle Nagy and Thomas Smith – for orchestrating a hundred-million-dollar fraud scheme.
Karony and his colleagues had issued the SafeMoon (SFM) token to investors with the promise of future profits. However, the defendants had lied to investors about the true status of the purported SFM lock liquidity feature. As SFM investments grew, the three executives allegedly misappropriated users’ funds and diverted investors’ supposedly locked SFM tokens to the tune of $200 million for personal use.
The US Securities and Exchange Commission (SEC), which filed a parallel action against SafeMoon executives, also accused the defendants of price manipulation following a price fall that resulted from investors gaining knowledge of the fraudulent scheme.
SafeMoon CEO Could Face Lengthy Prison Sentence
John Karony, alongside the other defendants, is facing charges for conspiracy to commit securities fraud, money laundering, and wire fraud. Notably, Karony and Smith were arrested in Utah and New Hampshire, respectively, while Smith remains at large.
However, Karony’s initial lawyers, Petrillo Klein & Boxer, managed to secure a $3 million bond before withdrawing from the case due to the defendant’s inability to pay for their services. John Karony is now expected to face trial with a new counsel secured through the Criminal Justice Act.
According to US laws, a single count of wire fraud or money laundering carries a maximum sentence of up to 20 years in prison, while securities fraud can result in up to five years. If found guilty on all charges, Karony could face a combined sentence exceeding 40 years in federal prison.
Featured image from John Karony on X, chart from Tradingview.com
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