What did John Karony do? Charges against Safemoon executives explored in wake of fraud allegations

Safemoon founder Kyle Nagy, CEO John Karony, and former CTO Thomas Smith have been charged in an international fraud scheme. While authorities have taken Smith and Karony into custody, Kyle Nagy is yet to be located. The same has been confirmed by the Department of Justice.

While the case is an ongoing investigation, authorities claimed that the Safemoon founder and the company executives allegedly misled investors. The defendants are not only facing criminal charges but have also allegedly violated some security policies by the Securities and Exchange Commission (SEC). Instead of rewarding their clients as per the plan, the defendants decided to use the money to improve their lifestyle.

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Safemoon founder, and two executives including CEO John Karony, have been charged on suspicion of being involved in an international fraud scheme

On Wednesday, November 1, 2023, the US Department of Justice charged the founder of Safemoon and two executives, including the CEO and former CTO, with allegedly defrauding investors and diverting huge amounts of invested money to contribute to their lavish lifestyle. The defendants have been charged with three criminal counts each of conspiring to commit securities fraud, wire fraud, and money laundering.

After the allegations, the Safemoon lawyers as well as the defendants have been contacted. However, they haven't issued an official statement regarding the accusations against them. Safemoon, created in 2021, promised investors that their money was safely "locked" in pools. It was further promised that the invested money couldn't be withdrawn by anyone.

Unfortunately, the alleged facts do not resonate with the claims. According to investigating officers, the investors sustained huge losses after realising that the money wasn't "locked." The defendants, Kyle Nagy, John Karony, and Thomas Smith, used the money to purchase expensive sports cars. Ivan Arvelo, agent in charge of Homeland Security Investigations in New York, described the incident as a result of "insatiable greed."

United States Attorney Peace stated:

"As alleged, the defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles and real estate."

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While the executives have been arrested, the founder of Safemoon is still out at large

US attorney Peace had also said:

"As fraudsters increasingly use digital assets to mislead investors and misappropriate funds, our Office will be at the forefront of pursuing them and their ill-gotten gains."

Ivan Arvelo said that HSI New York will investigate these matters every time individuals like John Karony and Thomas Smith try to defraud investors and disrupt the American finance system. Arvelo additionally said,

"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."

Peace has appreciated the efforts and assistance offered by the U.S. Securities and Exchange Commission in this case. Reuters reported that John Karony was taken into custody in Provo and Thomas Smith has been arrested in New Hampshire.