The US Securities and Exchange Commission (SEC) has made some serious accusations against SafeMoon, a crypto company that has gained popularity, as well as its key figures, including founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith.
The SEC alleges that SafeMoon sold a cryptocurrency asset known as SafeMoon without going through the proper registration process.
Furthermore, it’s claimed that they made grand promises of substantial gains to investors but then allegedly withdrew more than $200 million in cryptocurrency assets and misused these funds.
David Hirsch, who oversees the Crypto Assets and Cyber Unit at the SEC, criticized these unregistered offerings, stating that they lacked the transparency and accountability needed to protect investors.
In no uncertain terms, he labeled Kyle Nagy as a fraudster who had enriched himself at the expense of others.
To reassure investors, Nagy claimed that their funds were secure. However, it is now alleged that a significant portion of the liquidity pool funds were never actually locked, and the individuals accused of wrongdoing spent this money on luxury items and personal expenses.
SafeMoon had once reached an impressive market capitalization of over $5.7 billion. However, it suffered a significant setback when investors discovered that the liquidity pools were not as secure as they had believed, leading to a 50% loss in value.
Furthermore, both Karony and Smith are facing accusations of attempting to manipulate the market by using misappropriated assets.
Critics have weighed in on this situation, suggesting that the SEC should be directing its attention towards cases like SafeMoon, rather than pursuing actions against legitimate projects such as Coinbase.