SEC Charges SafeMoon LLC and Executives for Massive Crypto Fraud

In a recent release, the Securities and Exchange Commission (SEC) unveils charges against SafeMoon LLC, its creator Kyle Nagy, and the company executives for perpetrating a massive fraudulent scheme involving the crypto asset security known as SafeMoon. The SEC's complaint details how the defendants promised astronomical profits but instead wiped out billions in market capitalization, withdrew millions from the project, and misappropriated investor funds for personal use. This blog explores the allegations, the SEC's response, and the legal action taken against the defendants in order to shed light on the importance of due diligence and caution in the cryptocurrency market.


Liam Ledger

11/1/20232 min read


In a recent development, the Securities and Exchange Commission (SEC) has filed a complaint against SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies' Chief Executive Officer, John Karony, and Chief Technology Officer, Thomas Smith. The allegations revolve around a fraudulent scheme involving the unregistered sale of the crypto asset security, SafeMoon. The defendants promised astronomical profits with the token but instead wiped out billions in market capitalization and misappropriated investor funds for personal use.

Details of the Scheme

According to the SEC's complaint, Kyle Nagy assured investors that funds were safely locked in SafeMoon's liquidity pool and could not be withdrawn. However, it has been alleged that a significant portion of the liquidity pool was never locked, and the defendants misappropriated millions of dollars for personal indulgences like luxury cars, travel, and homes.

The SEC further highlights that SafeMoon experienced an enormous surge in price, reaching a market capitalization of over $5.7 billion. However, when it was revealed that the liquidity pool was not as claimed, the price plummeted by nearly 50 percent. It is alleged that Karony and Smith then manipulated the market by propping up the price with misappropriated assets and engaging in wash trading.

The SEC's Response: David Hirsch, Chief of the SEC Enforcement Division's Crypto Assets and Cyber Unit, expressed concern over the lack of transparency and accountability in unregistered offerings like the SafeMoon token. He emphasized the need for caution in the crypto space, highlighting that such fraudsters exploit its popularity to promise extraordinary profits while delivering nothing but disappointment.

Jorge G. Tenreiro, Deputy Chief of the CACU, echoed Hirsch's sentiments, urging investors to exercise extreme caution. Tenreiro emphasized the frequency with which fraudsters take advantage of the crypto space, leading to unfortunate outcomes for unsuspecting investors.

Legal Action and Charges

The SEC has filed a complaint in the U.S. District Court for the Eastern District of New York, charging the defendants with violating the registration and anti-fraud provisions of the Securities Act of 1933 and the anti-fraud provisions of the Securities Exchange Act of 1934.


The SEC's investigation into SafeMoon LLC and its executives highlights the importance of investor caution and due diligence in the ever-evolving cryptocurrency market. This case serves as a reminder that regulatory bodies are vigilant in protecting investors from fraudulent schemes and ensuring accountability. Investors are urged to stay informed, conduct thorough research, and exercise caution before investing in any crypto assets.