SAFEMOON CEO SENTENCED TO 100 MONTHS IN FEDERAL PRISON IN MULTI-MILLION DOLLAR CRYPTO FRAUD CASE

BROOKLYN, NEW YORK — The former chief executive officer of digital asset company SafeMoon US LLC has been sentenced to 100 months in federal prison after a jury convicted him of orchestrating a multi-million dollar cryptocurrency fraud scheme that misled investors about the security and structure of the project’s liquidity pools.

Braden John Karony, 29, of Provo, Utah, was sentenced by United States District Judge Eric Komitee in the Eastern District of New York following his May 2025 conviction on charges of conspiracy to commit securities fraud, wire fraud, and money laundering. In addition to the prison term, the court ordered forfeiture of approximately $7.5 million and entered a forfeiture verdict for two residential properties. Restitution to victims will be determined at a later date.

The case centers on SafeMoon, a decentralized finance token launched in March 2021 during the height of the retail cryptocurrency surge. Marketed as a “community-driven” digital asset with built-in tokenomics designed to reward holders, SafeMoon quickly amassed millions of holders and reached a market capitalization exceeding $8 billion within months of launch.

At the core of the project was a 10% transaction tax embedded in the smart contract governing token transfers. Half of that tax was advertised as being redistributed to existing token holders through an automatic “reflection” mechanism, increasing their token balances over time. The remaining half was promoted as being deposited into liquidity pools intended to stabilize the token’s trading environment and reduce volatility.

Federal prosecutors established at trial that these liquidity pools were not locked or inaccessible to insiders as publicly represented. Instead, Karony and his co-conspirators retained control over the liquidity and used that access to divert millions of dollars’ worth of digital assets for personal use. Jurors heard evidence that insiders withdrew funds from liquidity pools, traded tokens for personal gain during peak pricing periods, and masked transfers through complex transaction routing across private wallets and centralized exchanges.

Investigators traced more than $9 million in crypto assets linked to the scheme. According to court records, proceeds were used to fund a series of high-value purchases, including a $2.2 million residence in Utah, additional properties in Utah and Kansas, multiple luxury vehicles including Audi R8 sports cars, a Tesla, and customized pickup trucks.

Prosecutors argued that public statements made by SafeMoon executives assured investors that liquidity pools were “locked” and inaccessible to insiders, preventing what is commonly known in the digital asset sector as a “rug pull,” a practice in which project developers withdraw liquidity and collapse the token’s value. Evidence introduced at trial demonstrated that insiders retained the ability to access and move those funds.

The case reflects the federal government’s continued scrutiny of digital asset projects that combine automated smart contract features with centralized executive control. While blockchain-based tokens often market decentralization and transparency as safeguards, prosecutors have increasingly targeted cases where governance authority and liquidity access remain concentrated in a small leadership group.

SafeMoon’s rapid growth during 2021 coincided with a period of heightened retail participation in decentralized finance projects. The token’s structure relied heavily on social media promotion, community branding, and claims of long-term sustainability through transaction taxation. As the broader cryptocurrency market contracted in subsequent years, federal investigators examined discrepancies between public representations and internal financial movements.

Co-conspirator Thomas Smith previously pleaded guilty to conspiracy to commit securities fraud and wire fraud and awaits sentencing. Another alleged co-conspirator, Kyle Nagy, remains at large. The investigation was conducted by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation, and Homeland Security Investigations, with assistance from the Securities and Exchange Commission.

The charges and conviction underscore a broader enforcement trend in digital asset markets. Federal prosecutors have increasingly framed certain token offerings as securities subject to disclosure obligations when investor funds are pooled and managed by identifiable leadership promising profit based on managerial efforts. Money laundering charges in such cases typically arise when illicit proceeds are routed through layered wallet structures designed to obscure traceability.

Digital asset tracing capabilities have expanded significantly in recent years. Investigators now routinely leverage blockchain analytics tools to reconstruct wallet flows, correlate exchange accounts, and identify transaction clusters tied to individual actors. In this case, prosecutors detailed how movement of funds through private wallets and exchange accounts was ultimately linked back to personal expenditures.

The sentence of 100 months reflects judicial consideration of the financial scale of the scheme, the leadership role attributed to Karony, and the number of victims affected. Federal courts often weigh market capitalization, investor reliance, and misuse of controlled liquidity pools when determining sentencing in crypto fraud cases.

SafeMoon’s collapse and subsequent prosecution illustrate the regulatory tension between decentralized branding and centralized control. Projects marketed as autonomous or algorithm-driven may still hinge on executive access to liquidity, exchange listings, and governance decisions. When that control is exercised in contradiction to public representations, federal securities and fraud statutes apply.

Karony’s case adds to a growing list of crypto executives prosecuted for investor deception during the 2020–2022 digital asset expansion period. As federal enforcement agencies continue to examine liquidity representations, tokenomics disclosures, and insider trading patterns within decentralized finance projects, additional cases are likely to emerge.

The defendant was convicted following a three-week trial and is presumed guilty under federal law pursuant to that verdict. Restitution proceedings remain pending.

The case was prosecuted by the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York.

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