News - Crypto scam: Authorities catch Safemoon

By Luc Vesters

Crypto scam: Authorities catch Safemoon

The crypto company Safemoon and its management team have been indicted in the United States. The founder, director and CTO are accused of securities fraud, money laundering and fraud. According to the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice, they allegedly embezzled $200 million in customer funds. According to the U.S. Department of Justice, Safemoon CEO John Karony and technical director Thomas Smith have already been arrested.

Authorities describe Safemoon as a lie. Investors were always told their money would be safe in so-called liquidity pools. But according to the SEC, "large portions" of the funds were never blocked. The defendants allegedly embezzled funds for fictitious token purchases and to maintain a luxury lifestyle, including "McClaren cars, extraordinary trips and luxury apartments."

Expensive sports cars and real estate

The concept of the project, founded in March 2021, included an aggressive marketing strategy on social media. Advertisements for Safemoon were also placed in Times Square in New York. According to the SEC, the defendants advertised that they would "take the price of the token to the moon." Instead, the liquidity pool allegedly served for personal enrichment, the defendants destroyed "billions in market capitalization" and extracted "crypto assets worth more than $200 million from the project."

"As alleged, the defendants intentionally misled investors and diverted millions of dollars to fund their greedy scheme and enrich themselves by purchasing a customized Porsche sports car, other luxury vehicles and real estate," said prosecutor Breon Peace.

Safemoon falls to historic low

Karony and Smith are also accused of market manipulation. When the price of cryptocurrency fell in response to public security vulnerabilities, they allegedly used customer funds to stabilize the price. The practice known as wash trading created the "impression of market activity."

"The defendants concealed their transactions of the fraudulent proceeds through numerous private, unhosted crypto wallet addresses, complex transaction routings and pseudonymous centralized exchange accounts," according to the Justice Department. According to Special Agent Fattorusso, the fraud was discovered through "cryptocurrency tracking and old-fashioned police work."

The price of the cryptocurrency Safemoon (SFM) has fallen about 80 percent from the previous day. At the time of writing, the token is at an all-time low of $0.00004113.

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