Former SafeMoon CEO Sentenced to 8 Years: Braden John Karony and $9M Investor Fraud

A federal judge in Brooklyn has sentenced Braden John Karony, the former CEO of Defi project SafeMoon, to 100 months in prison for his role in a multi-million dollar fraud scheme.

Karony was convicted of conspiratorial fraud and money laundering after diverting approximately $9 million in investor funds to purchase luxury assets, despite public assurances that the project’s liquidity pools were locked.

The coin itself, Safemoon or SFM, has been in decline since the last bull run, now hovering at -99% from its top in 2021.

(source – Coingecko)

Fraud Scheme Exposed: Safemoon CEO in The Wrong?

Launched in March 2021 on the Binance Smart Chain, SafeMoon rapidly gained popularity during the 2021 crypto bull market by promising holders passive yields through redistributed transaction fees. A core component of the project’s marketing was the claim that liquidity pools were “locked” and inaccessible to the developers, supposedly securing investor funds against a “rug pull”.

However, federal prosecutors demonstrated that Karony and his co-conspirators, including former Chief Technology Officer Thomas Smith and creator Kyle Nagy, maintained secret access to these pools.

(source – Justice.gov)

According to court findings, the executives exploited this backdoor to drain millions of dollars from the SafeMoon US LLC liquidity pools. The sentencing on Tuesday comes nine months after a federal jury convicted Karony of conspiracy to commit securities fraud, wire fraud, and money laundering in May 2025. While Smith pleaded guilty earlier and awaits sentencing, Nagy remains a fugitive with an active warrant for his arrest.

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Court Mandates Forfeiture and Restitution

During the sentencing hearing, the court ordered Karony to forfeit approximately $7.5 million and his interest in two residential properties. The Department of Justice (DOJ) revealed that the stolen proceeds were used to finance a lavish lifestyle, including the purchase of a $2.2 million home in Utah, a Tesla, an Audi R8, and other custom vehicles. FBI Assistant Director James C. Barnacle, Jr. emphasized the betrayal of fiduciary trust in a statement regarding the verdict:

While the forfeiture addresses the illicit gains, the court indicated that the final restitution amount for victims would be determined at a later date, consistent with procedures seen in other major financial fraud cases reported by legal analysts.

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Authorities Continue Crackdown on Crypto Crimes

The 100-month sentence reinforces the US government’s intensifying focus on accountability within the digital asset sector. The outcome aligns with broader enforcement trends where financial opacity is met with severe penalties. For instance, the US DOJ recently finalized a $400 million forfeiture in the Helix crypto mixer case, signaling a continued zero-tolerance policy for platforms that facilitate illicit money flows.

This strict judicial stance is not limited to the United States. Recently, South Korea sentenced a crypto firm executive to jail just ahead of implementing tighter corporate regulations. The severity of sentences varies by crime, but the trajectory is clear; cases involving direct theft or darknet operations attract long terms, such as when the Incognito Market founder received a 30-year jail term. For SafeMoon investors, Karony’s sentencing marks the closure of a significant chapter in the project’s controversial history.

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