The Securities and Exchange Commission (SEC) has accused SafeMoon, its creator Kyle Nagy, CEO John Karony, and CTO Thomas Smith of orchestrating a colossal fraudulent scheme. This scheme was executed through the unregistered sale of the crypto asset security, SafeMoon.
The SEC’s complaint delineates how the defendants pledged to skyrocket the token’s price “Safely to the moon.” However, the reality was starkly contrasting. They eradicated billions in market capitalization, extracted crypto assets exceeding $200 million from the project, and diverted investor funds for personal extravagances.
SafeMoon’s Value Halves as SEC Accuses Execs of Fraudulent Activities
David Hirsch, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit (CACU), expressed stern concern. He emphasized the susceptibility of decentralized finance (DeFi) ventures to scammers due to a lack of required disclosures and accountability.
Kyle Nagy, as per Hirsch, exploited these loopholes to amass wealth at others’ expense.
“Decentralized finance claims to deliver transparency and predictable outcomes, but 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,” Hirsch said.
The marketing narrative spun by Nagy assured investors of secure funds within SafeMoon’s liquidity pool. Contrarily, substantial portions of this pool remained unlocked. This allowed Nagy, Karony, and Smith to allegedly splurge on luxury cars, opulent residences, and lavish vacations.
Read more: 15 Most Common Crypto Scams To Look Out For
Jorge G. Tenreiro, Deputy Chief of the CACU, echoed a warning for investors. He highlighted the propensity of fraudsters to allure investors with lofty promises.
“We urge investors to continue to exercise extreme caution in this space, as fraudsters exploit the popularity o
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Author: Bary Rahma
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