- SafeMoon executives face securities and fraud charges.
- The SafeMoon team intends to carry on building.
- The project has taken a severe reputational hit.
Cryptocurrency crime has risen recently, with losses exceeding $20.1 billion in 2022 alone. The history of cryptocurrency scams has given rise to several prominent schemes over the years, such as Bitconnect. This cryptocurrency-based Ponzi scheme stole $2.4 billion from users, and OneCoin, which raised $4 billion from investors before “Cryptoqueen” Ruja Ignatova disappeared along with the funds.
SafeMoon is the latest crypto project under fire following securities and fraud charges leveled against key executives at the company. But despite damning allegations of criminality at the expense of users, SafeMoon has vowed to continue pushing ahead with its DeFi innovation goals.
SafeMoon Responds to Federal Charges
In response to the federal charges against SafeMoon founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith, SafeMoon confirmed its commitment to continue building and achieving its roadmap goals.
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However, in acknowledgment of the charges, the SafeMoon team stated that they take the complaint by federal authorities seriously and plan to address community concerns as and when more information is released.
The Securities Exchange Commission (SEC) and Federal Bureau of Investigation (FBI) jointly filed against the SafeMoon executives over allegations of promoting unregistered securities, misappropriating investor funds for personal enrichment, and making fraudulent representations over the “locked liquidity pool.”
The complaint further alleged that Karony and Smith engaged in wash trading to exaggerate the volume and artificially prop up the token price. This market manipulation was achieved using funds stolen from the “locked liquidity pool.” On November 1, the US Department of Justice confirmed that Karony and Smith had been arrested, while Nagy remains at large.
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Despite SafeMoon’s commitment to continue despite the allegations, community feedback suggests that even the most die-hard supporter has lost faith in the project.
Game Over?
Although allegations of fund misappropriation had been circulating for over a year before the federal charges, die-hard SafeMoon users continued to voice their support for the project. However, since the filing of the federal complaint, positive sentiment toward the project is rapidly slipping away.
A Reddit post on SafeMoon’s response to the federal charges detailed a general sentiment of disbelief that the team intends to continue building. Other common themes included discussion on prison life and references to previous instances of SafeMoon dismissing criticisms as FUD and a non-issue.
“Continue to build what? Their updated resumes?” wrote a Reddit user.
SafeMoon enthusiast “Danology” conceded that Karony may well be guilty of the charges leveled against him. However, he stated that the project is “bigger than him” and declared his intention to hold to zero if that is the ultimate outcome rather than bail out at this time.
On the Flipside
- SafeMoon released a patch update on November 3, indicating that the team is continuing to build.
- Guilt has not been legally established as the case has yet to go to trial.
- The SFM token is down 70% over the last 24 hours.
Why This Matters
Although SafeMoon continues building in the aftermath of the federal charges, its reputation has taken a severe pounding. In the year between fraud allegations surfacing and the filing of federal charges, the crypto community was split over the project’s legitimacy, highlighting the power of tribalism to sway objective thinking.
Learn more about the federal charges against SafeMoon and key executives here:
SafeMoon Not So Safe, SEC, FBI Allege Brazen Fraud
Find out the Cardano community pushback over Input Output acquiring Nami Wallet here:
Cardano CEO Blasts Nami Acquisition Critics as “Drama Queens”
