SEC & DOJ charges for $200 million Safemoon liquidity theft

[Blocksmith]

The SEC and DOJ charged SafeMoon LLC, its creator Kyle Nagy, CEO John Karony, and CTO Thomas Smith in November 2023 for a massive fraud scheme. They allegedly misled investors by claiming the liquidity pool was "locked" and inaccessible, while secretly withdrawing over $200 million for personal use, including luxury cars, homes, and vacations.



Safemoon was once valued at over $8 Billion dollars!
Accusations of money laundering, wash trading, fraud, and theft are just some of the challenges they are facing.

Thomas has pled guilty, John Karony claims he is innocent and will prove it in court, and Kyle Nagy reportedly fled to Russia and was allegedly extorted by the Federal Security Service.

These guys basically straight lied to their audience and said that the liquidity pool was locked and was "automagically" added. The reality is that they were skimming hard from this wallet and using wash trading to artificially inflate the price while pounding money into influencer marketing.

Logan Paul was named as a defendant along with musician Nick Carter, rappers Soulja Boy and Lil Yachty, and social media personality Ben Phillips

Korny's legal defense suggested that Trump's new crypto regulatory changes might grant him a non-guilty verdict.

Now it's important to understand this kind of thing is happening on a daily basis in the crypto world (maybe not the liquidity skimming so much but other manipulations, sniping, insider trading and fraud), these guys just did bigger than most and therefore were spotlighted and now will be made an example of.

So what type of consequences will they face? Probably a couple years in jail, repayment of some of the funds, and they will be out in half the time on good behavior and then will likely disappear and enjoy hidden wallets that the feds missed

Moral of the story, question everything, don't trust anyone in this industry, and if you are a coin founder... do things the right away and avoid legal issues, it's just a better way to do business.

 

[Somchai]

Is the SEC & DOJ still providing "post-disaster" actions or has this ability been removed under the current government? But either way, the horse has bolted so the bigger question is to how this sort of fraud can be prevented......

 

[Blocksmith]

I'm not sure it actually can be prevented... The consequences for stealing millions of dollars and financial services crimes are so incredibly weak globally that we often see petty criminals facing longer jail sentences for a fraction of the destruction caused.

What they need to do is throw the book at a few of them and hopefully scare others from replicating their crimes.
But the reality seems to be: You only get busted if you go too big and land on the public's radar, there are TONS of guys that scammed a few million and faced zero consequences likely resulting in them doing it over and over.

 

[Somchai]

It all seems so crazy that this can continue as it is without any slow down in new investors jumping in? What am I missing?