On Tuesday, in federal court in Brooklyn, Braden John Karony, the Chief Executive Officer of SafeMoon US LLC, a digital asset company registered in Utah (SafeMoon) was sentenced by United States District Judge Eric Komitee to 100 months in prison for conspiracy to commit securities fraud, wire fraud, and money laundering in connection with a scheme to defraud investors in a decentralised finance digital asset called ‘SafeMoon’.
As part of the sentence, Karony was ordered to forfeit approximately $7.5 million. The amount of restitution to the victims will be determined at a later date.
Karony was convicted by a federal jury following a three-week trial in May 2025. The jury also issued a verdict of forfeiture for two residential properties.
SafeMoon tokens were digital assets issued by SafeMoon LLC in March 2021 on a public blockchain.
Through the operation of SafeMoon’s smart contract, every transaction in SafeMoon was automatically subject to a 10% tax, meaning that if a holder of SafeMoon transferred 10 SafeMoon to another user, 1 SafeMoon would automatically be retained from the transfer as a tax, and the remaining 9 SafeMoon would be received by the other party.
As marketed to SafeMoon investors, the proceeds of SafeMoon’s 10% tax were split into two five per cent tranches, with the proceeds intended to benefit SafeMoon holders in specific ways.
The first five per cent tranche of the tax proceeds was supposed to be “reflected” back to and distributed among all SafeMoon holders in proportion to their current SafeMoon holdings, thereby automatically increasing the total quantity of SafeMoon held by every SafeMoon investor.
The remaining five per cent tranche of SafeMoon tax proceeds was supposed to be deposited into designated SafeMoon “liquidity pools”. The larger the SafeMoon liquidity pool, the greater the liquidity in the market for SafeMoon.
In the months after its March 2021 launch, SafeMoon grew to have millions of holders and a market capitalisation of more than $8 billion.
Karony and his co-conspirators misrepresented various material aspects of the SafeMoon offering to investors.
Such misrepresentations included that SafeMoon relied on “locked” liquidity pools that would automatically increase in size due to the 10% tax imposed on every SafeMoon transaction; that the “locked” SafeMoon liquidity pool prevented the defendants and other insiders at SafeMoon from being able to “rug pull” (a type of crypto fraud) SafeMoon investors by removing liquidity from the SafeMoon liquidity pool; that tokens in the liquidity pool would only be used for limited pre-defined business purposes, not personal enrichment; that the defendants would manually add token pairs to the SafeMoon liquidity pool when transactions of SafeMoon occurred on specific centralized exchanges; and that the developers were not and had not been holding and trading SafeMoon for their benefit.
In reality, Karony and his co-conspirators retained access to the SafeMoon liquidity pools and used that access to intentionally divert and misappropriate millions of dollars’ worth of tokens for their personal benefit.
In addition, although they publicly denied holding or trading SafeMoon, they repeatedly bought and sold it, sometimes at the height of the SafeMoon market price, generating millions of dollars in profits.
Karony and his co-conspirators masked their movement of the fraudulent proceeds via numerous private un-hosted crypto wallet addresses, complex transaction routing, and pseudonymous centralised exchange accounts.
Karony acquired over $9 million in crypto assets from the scheme and used some of the proceeds to purchase luxury vehicles and real estate, including a $2.2 million home in Utah, additional homes in Utah and Kansas, a $277,000 Audi R8 sports car, another Audi R8, a Tesla, and custom Ford F-550 and Jeep Gladiator pickup trucks.
Co-conspirator Thomas Smith pleaded guilty in February 2025 to conspiracy to commit securities fraud and wire fraud and is awaiting sentencing. Co-conspirator Kyle Nagy remains at large.
“Karony lied to investors from all walks of life—including military veterans and hard-working Americans—and defrauded thousands of victims in order to buy mansions, sports cars, and custom trucks,” stated Joseph Nocella, Jr., United States Attorney for the Eastern District of New York. “Today’s sentence demonstrates that there are significant consequences for financial crimes. Our Office will continue to vigorously prosecute economic crimes that harm investors and weaken societal trust in the stability and security of digital asset markets.”
Nocella thanked the U.S. Securities and Exchange Commission for its work on the case.
“Not only did Braden John Karony abuse his position as CEO, but he also betrayed his investors’ trust by stealing more than nine million dollars in digital assets from his company to fund his lavish lifestyle,” James C. Barnacle, Jr., Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office, stated. “The FBI is committed to addressing fraud in the digital asset marketplace to level the playing field for Americans.”
“Braden Karony exploited his access to SafeMoon’s liquidity pool to divert and misappropriate millions in cryptocurrency. He deceived investors, using their funds to lavishly expand his portfolio with million-dollar homes and luxury cars,” Harry T. Chavis, Jr., Special Agent in Charge, Internal Revenue Service Criminal Investigation, New York, explained.
Chavis added, “By employing complex transactions to obscure the movement of these illicit proceeds, Karony acquired over $9 million in crypto assets. However, the expertise of IRS-CI special agents in tracing financial transactions outmatched Karony’s intricate schemes. His game of hide-and-seek failed, and now he must face justice and serve time in prison for his crimes.”
“Braden John Karony’s sentencing exposes the deep betrayal at the heart of a scheme that preyed on the hopes and trust of SafeMoon investors. He and his co-conspirators orchestrated a scheme fueled by greed and exploited the faith of over a million victims,” said Michael Alfonso, Acting Special Agent in Charge, Homeland Security Investigations, New York. “HSI New York, together with our law enforcement partners, will continue to work tirelessly to ensure those who exploit the trust of investors—whether through fiat or cryptocurrency—will face justice.”
