Breaking: US SEC Charges Safemoon and its Executives for Fraud
The United States SEC has charged SafeMoon, a Decentralized Finance (DeFi) platform and some of its executives in the U.S. District Court for the Eastern District of New York, for their involvement in a massive fraud scheme.
SEC Charges SafeMoon: the Allegations
Safemoon executives including its creator Kyle Nagy, the companies’ Chief Executive Officer (CEO) John Karony, the Chief Technology Officer Thomas Smith, and SafeMoon US LLC were all named as defendants in the lawsuit. According the terms of the SEC charges against SafeMoon, the defendants participated in the unregistered sales of the crypto asset security, “SafeMoon”.
According to the SEC filing, the SafeMoon executive team had earlier informed investors that their funds were safely locked away and could not be accessible to anyone including the “defendants”. This condition stands while the funds were held in the SafeMoon liquidity pool, per the agreement between the investors and SafeMoon.
However, it turned out to be that a significant portion of the funds were never locked and tucked away. The executive team went ahead to withdraw almost $200 million in customer deposits from the project. The funds were allegedly misappropriated and plunged into the purchase of luxury vehicles, extravagant travel, luxury homes, and other personal properties for the officials.
Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit (CACU) David Hirsch, explained how unregistered offerings do not offer the disclosure and accountability that the law demands. Furthermore, he stated that such unregistered offerings often attract scammers like SafeMoon creator Kyle Nagy. These bad actors leverage the vulnerabilities discovered in these protocols to enrich themselves, not acknowledging the level of harm caused to their victims.
SEC Cautions Investors
As a warning, the SEC has urged investors to exercise extreme caution when investing their assets in the crypto sector, citing that many ongoing exploitations following the rising popularity and adoption of crypto tokens. Per the regulator, scammers promise investors enormous profits margins and the unsuspecting customers fall victim to the fraudulent schemes.
Notably, the misappropriation of customers deposits is somewhat similar to one of the charges levied against order FTX founder Sam Bankman-Fried. It is also worth mentioning that the SEC has pending legal cases against Coinbase and Binance for offering more prominent assets like Cardano (ADA) and Polygon (MATIC) as unregistered securities.
- XRP Ledger Rolls Out MPT Standard for Real-World Asset Tokenization
- SEC Puts Crypto ETF Approvals On Hold Following U.S. Government Shutdown
- Pi Network Adds DEX and AMM Features To Expand Pi Coin’s Utility
- October Fed Rate Cut Odds Rise After Weak U.S. Labor Data, Bitcoin Surges
- Hashdex Adds Cardano to Crypto Index Fund as ADA Gains SEC Listing Eligibility
- BONK Price Rally Ahead? Open Interest Jumps as TD Buy Signal Flashes
- Shiba Inu Price to Surge as Whales Buy and Team Commits to Shibarium Growth
- XRP Price Prediction After Ripple CTO David Schwartz Resigns
- SUI Price Eyes $4.5 as Coinbase Futures Listing Sparks Market Optimism
- Chainlink Price Holds $20 Support Amid Tokenization With DTA Standard Progress – Is $47 Next?
- Analyst Predicts Dogecoin Price Surge as DOGE ETF AUM Hits $20M
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
