Creators of SafeMoon crypto project accused of $200 mln fraud

SEC accused SafeMoon crypto project of $200 mln fraud

The U.S. Department of Justice claims that $200 million was secretly withdrawn from the project, which was spent on buying sports cars, luxury homes, and expensive trips

The U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice have charged the founders and team members of the SafeMoon cryptocurrency project with fraud and violations of securities laws.

Law enforcement agencies arrested two of the project's executives - CEO John Caroni and CTO Thomas Smith. The project's founder, Kyle Nagy, is still at large.

According to prosecutors, the project promised investors huge returns, but in fact, the team members secretly withdrew $200 million from the project and spent the money to buy McLaren sports cars, and luxury real estate and pay for expensive trips.

At its peak, the SafeMoon token (SFM) had a capitalization of $5.7 billion, showing an increase of 55000% from March 12 to April 20, 2021. However, the token's price soon began to plummet after investors discovered that most of the coins were in the hands of the project's organizers.

The SEC said that the project team deceived investors, claiming that even the founders did not have access to the tokens. In addition, some project participants simulated high trading volumes of SafeMoon tokens on exchanges to create a perception of high interest from market participants.

In September 2023, the SEC said it was preparing new lawsuits against cryptocurrency companies and decentralized financial projects. This year, the regulator has already filed charges against Binance and Coinbase and fined the Kraken exchange $30 million. In late August, the SEC for the first time brought charges of illegal sale of non-fungible tokens (NFT).