The U.S. Securities and Exchange Commission (SEC) has charged SafeMoon and its executive team with perpetrating a fraudulent scheme through an unregistered securities sale.
The SafeMoon executive team withdrew more than $200 million from the project and misappropriated investors funds for personal use, according to the SEC’s complaint filed on Wednesday.
"Unregistered offerings lack the disclosures and accountability that the law demands, and they attract scammers like Kyle Nagy, who use these vulnerabilities to enrich themselves at the expense of others,” said David Hirsch, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit (CACU), referring to SafeMoon creator Nagy. The agency also accused CEO John Karony and Chief Technology Officer Thomas Smith in the fraud.
SafeMoon was a meme coin that rolled out during the height of the previous bull market. Its team promised users that staked funds would be "locked" in a liquidity pool, but the SEC said that "large portions of the liquidity pool were never locked" and that executives used funds to buy luxury homes, travel and McClaren cars.
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The SafeMoon team also allegedly used locked assets to make large purchases of SafeMoon to prop up its price and manipulate the market, the SEC said.
