SEC finally going after fraudulent crypto - SafeMoon charged

SEC finally going after fraudulent crypto - SafeMoon charged

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The SEC has charged crypto company SafeMoon with offering crypto securities, and is also going after the executive team for alleged massive fraud.

It appears that Gary Gensler’s Security and Exchange Commission is at last putting at least some of its resources into going after crypto companies that appear to be fraudulent, even while it brings down LBRY, and continues to pour tax-payers money into pursuing the likes of Coinbase.

SafeMoon and execs charged

SafeMoon, which Crypto Daily warned against in August 2021, and which describes itself as “The web3 movement for everyone”, is not living up to what it purportedly set out to do. The SEC’s enforcement action, a description of which was published in a press release on the SEC site on Wednesday, accuses the crypto company of issuing unregistered securities.

Plenty of crypto companies could certainly be charged by the SEC of the same thing, at least in the eyes of chairman Gensler, but more significant is the fact that the SEC has charged the Safemoon executive team of committing very serious fraudulent activities.

Funds safely locked …

Creator of SafeMoon, Kyle Nagy, CEO John Karony and CTO Thomas Smith, have been charged with “wiping out billions in market capitalisation”, “withdrawing crypto assets worth $200 million”, and “misappropriating investor funds for personal use”.

The press release went on to describe how Safemoon was touted as having its funds “safely locked” by Nagy, who assured investors that they couldn’t be withdrawn by anyone, including the management team. Nevertheless, it is alleged that large parts of the funds were never locked, and the management team were able to withdraw them in order to buy “McClaren cars” and fund “luxury travel” among other purchases.

The SEC statement read that the Safemoon price had “rocketed” more than 55,000% to reach a market cap of $5.7 billion, before the price plummeted 50% when the public learned that the funds were not locked as had been claimed.

It was at this point that Karony and Smith used investor funds to buy large amounts of SafeMoon in order to prop up the price. Karony was also accused of opening a separate trading account which he used for “wash trading” the SafeMoon token, making it look like there was plenty of market activity for it.

Scammers operating in the crypto space

The SEC also used the press release to inform the public of what it perceives as “scammers” operating in the crypto space. Jorge G. Tenreiro, Deputy Chief of the CACU, was quoted as saying:

“We urge investors to continue to exercise extreme caution in this space, as fraudsters exploit the popularity of crypto assets to promise astronomical profits while all too frequently only delivering a crash landing,”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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