A push by the Trump-era Justice Department to scale
back crypto enforcement has done little to deter federal prosecutors from
pursuing Braden Karony, the former CEO of SafeMoon, who faces fraud charges
tied to the token’s collapse, law360.com reported, citing DOJ filings today (Friday).
His upcoming trial in May now serves as a key test of
whether the DOJ’s new approach will shield executives from past alleged
wrongdoing. In an April 18 court filing, U.S. Attorney John Durham
of the Eastern District of New York confirmed that his office would proceed
with the case against Karony.
Prosecutors Move Forward Despite New Memo
This came less than two weeks after Deputy Attorney
General Todd Blanche issued a DOJ memo suggesting the department may stop
pursuing crypto-related cases rooted in “regulation by prosecution.”
Karony faces charges including conspiracy to commit
securities fraud, wire fraud, and money laundering. Prosecutors allege he
misappropriated millions of dollars in SFM tokens between 2021 and 2022. He
pleaded not guilty and has been out on a $3 million bond since February.
Today we charged SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies’ CEO, John Karony, and Chief Technology Officer, Thomas Smith, for perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon.
— U.S. Securities and Exchange Commission (@SECGov) November 1, 2023
Karony’s defense team had argued that his trial should
be postponed, given the evolving stance on crypto regulation under President Donald Trump. His lawyers said there was a real possibility that the
government might soon stop treating assets like SafeMoon as securities,
undermining the core of the case.
Since Trump took office, the SEC and DOJ have moved
away from aggressive crypto enforcement. The SEC, under acting chair Mark
Uyeda, dropped several high-profile cases against Ripple Labs, Coinbase, and
Kraken. The agency also formed a new task force, led by Commissioner Hester
Peirce, to explore regulatory clarity around digital assets.
Trump-Era Shift in Enforcement Signals Broader Change
In addition, memecoins were declared outside the scope
of securities laws, signaling a more relaxed posture compared to the approach
under former chair Gary Gensler.
Despite the policy changes, Karony’s case is moving
forward, raising questions about how far the DOJ’s new stance will go. While
other cases have been dropped or paused, the SafeMoon case continues, at least
for now, as a possible exception—or perhaps as a final chapter from a stricter
regulatory era.
Last year, the SEC filed charges against SafeMoon, its
Founder, Kyle Nagy, SafeMoon US, and the company’s top executives, John Karony
and Thomas Smith. The regulator disclosed a fraudulent scheme related to the
unregistered sale of SFM, a cryptocurrency that promises substantial returns
to investors.
A push by the Trump-era Justice Department to scale
back crypto enforcement has done little to deter federal prosecutors from
pursuing Braden Karony, the former CEO of SafeMoon, who faces fraud charges
tied to the token’s collapse, law360.com reported, citing DOJ filings today (Friday).
His upcoming trial in May now serves as a key test of
whether the DOJ’s new approach will shield executives from past alleged
wrongdoing. In an April 18 court filing, U.S. Attorney John Durham
of the Eastern District of New York confirmed that his office would proceed
with the case against Karony.
Prosecutors Move Forward Despite New Memo
This came less than two weeks after Deputy Attorney
General Todd Blanche issued a DOJ memo suggesting the department may stop
pursuing crypto-related cases rooted in “regulation by prosecution.”
Karony faces charges including conspiracy to commit
securities fraud, wire fraud, and money laundering. Prosecutors allege he
misappropriated millions of dollars in SFM tokens between 2021 and 2022. He
pleaded not guilty and has been out on a $3 million bond since February.
Today we charged SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies’ CEO, John Karony, and Chief Technology Officer, Thomas Smith, for perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon.
— U.S. Securities and Exchange Commission (@SECGov) November 1, 2023
Karony’s defense team had argued that his trial should
be postponed, given the evolving stance on crypto regulation under President Donald Trump. His lawyers said there was a real possibility that the
government might soon stop treating assets like SafeMoon as securities,
undermining the core of the case.
Since Trump took office, the SEC and DOJ have moved
away from aggressive crypto enforcement. The SEC, under acting chair Mark
Uyeda, dropped several high-profile cases against Ripple Labs, Coinbase, and
Kraken. The agency also formed a new task force, led by Commissioner Hester
Peirce, to explore regulatory clarity around digital assets.
Trump-Era Shift in Enforcement Signals Broader Change
In addition, memecoins were declared outside the scope
of securities laws, signaling a more relaxed posture compared to the approach
under former chair Gary Gensler.
Despite the policy changes, Karony’s case is moving
forward, raising questions about how far the DOJ’s new stance will go. While
other cases have been dropped or paused, the SafeMoon case continues, at least
for now, as a possible exception—or perhaps as a final chapter from a stricter
regulatory era.
Last year, the SEC filed charges against SafeMoon, its
Founder, Kyle Nagy, SafeMoon US, and the company’s top executives, John Karony
and Thomas Smith. The regulator disclosed a fraudulent scheme related to the
unregistered sale of SFM, a cryptocurrency that promises substantial returns
to investors.
Feed from Financemagnates.com