PROVO — One of the winners of Utah Business’s 2022 CEOs of the Year award was arrested Wednesday for involvement in a multimillion-dollar international fraud scheme.
Braden John Karony, also known as “John Karony” and “CPT HODL T MUN,” 27, of Provo, Utah, was arrested in Provo on charges of conspiracy to commit securities fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering, according to a U.S. news release -Public prosecutor.
According to authorities, Karony is the CEO of SafeMoon LLC, a company focused on creating digital assets over a public blockchain, also known as cryptocurrency and non-fungible tokens.
SFM token scheme
According to the press release, in March 2021, SafeMoon issued “SFM” tokens on the public blockchain, which buyers could purchase with a tax of at least 10%. The 10% tax was split and distributed across SFM liquidity pools.
“In the months following its launch in March 2021, SFM grew to more than one million holders and a market cap of more than $8 billion,” the press release said.
According to authorities, Karony and two other defendants misled investors by claiming that the liquidity pools were “locked” and would prevent a “rug pull” – a type of crypto fraud.
“In reality, the defendants allegedly maintained access to the SFM liquidity pools and used that access to intentionally divert and misuse millions of dollars worth of tokens from the SFM liquidity pools for their personal benefit,” the press release states.
Authorities allege that the three defendants “repeatedly bought and sold SFM for their personal benefit, including at SFM’s market price, thereby generating millions of dollars in profits.”
Authorities believe that SafeMoon’s market capitalization has risen to over $8 billion.
According to the press release, the defendants used the money to purchase luxury vehicles and real estate in New Hampshire, Utah and Florida.
SafeMoon’s chief technology officer, Thomas Smith, also known as “Papa,” 35, of Bethlehem, New Hampshire, was also arrested on the same charges as Karony.
SafeMoon creator Kyle Nagy, also known as “Safemoon Dev,” 35, of Vero Beach, Florida, remains at large, authorities said.
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