Is the Previous SafeMoon CEO Truly Guiltless? 2021 Investors Call for Refunds

Executives of SafeMoon accused of swindling investors. As ex-CEO John Karony prepares for trial, will those affected by the 2021 downfall achieve justice? SFM tokens are now valueless.

“I am not guilty and did not engage in fraud,” proclaimed John Karony, co-founder of SafeMoon, a Decentralized finance venture that fell apart in December 2023 amidst claims of financially deceiving investors.

The tale of SafeMoon illustrates themes of aspiration and treachery. Following its exuberant launch in March 2021, SafeMoon swiftly captivated digital currency enthusiasts, many hoping for a moonshot, especially as some of the top crypto coins to acquire were surging.

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SafeMoon’s Ascent and Decline

At its zenith, SafeMoon held a crypto market capitalization exceeding $1 billion. The SFM coin was one of the standout performers.

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Investor interest was piqued by the allure of passive income via its distinctive tokenomics model.

SafeMoon token owners earned rewards from transaction fees, an enticing proposition that drew countless investors, some investing their life savings, to jump at the chance to create effortless income.

Approximately four years post-launch, SafeMoon has dwindled to a shadow of its once-prominent presence. The native token, SFM, is now merely worth a fraction of a cent, having plummeted more than 97% from its peak. Currently, it falls significantly short compared to some of the top Solana meme tokens. SafeMoon is in disarray after filing for Chapter 7 bankruptcy in December 2023.

Karony’s Trial

Currently, investors, with nothing but devalued assets, are pursuing justice and urging officials to long-term holding Karony, the former CEO, responsible. The fraud trial is underway in the Eastern District of New York.

Federal prosecutors accuse Karony, Kyle Nagy, who has fled to Russia and remains at large, and former CTO Thomas Smith of defrauding investors, allegedly diverting over $200 million from “locked” market fluidity pools between 2021 and 2022.

The U.S. Department of Justice (DoJ) and the Securities and Trading network Commission (SEC) charged the three executives with securities fraud, wire fraud, and conspiracy to commit money laundering in November 2023, just prior to SafeMoon’s bankruptcy declaration.

Authorities assert that the misappropriated funds were used for luxury automobiles, estates, and a private jet, all while deceiving investors about the financial condition of the protocol.

“As alleged, the executives of SafeMoon inflated their company’s worth to over $8 billion, but instead of rewarding their investors as promised, their endless greed caused them to squander millions on extravagant pleasures. Today, none of their luxury possessions can shield them from the repercussions of their actions,” stated Ivan J. Arvelo, Special Agent in Charge of Homeland Safety Investigations, New York. “HSI New York will aggressively pursue those who seek to exploit investors and the U.S. financial system for personal benefit.”

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Will Justice Prevail for Victims?

In the ongoing proceedings, Karony has entered a not guilty plea to all accusations and was granted release on a $3 million bond in January 2024.

He asserts his innocence, insisting that the truth will reveal itself during the trial. On the initial day of his trial on May 6, 2025, journalists noted that the defense team seemed “unexpectedly strong.”

Defense attorneys argue that their client was not directly accountable for the misused funds. They further assert that shifts in U.S. crypto regulations following Donald Trump’s election undermine the SEC’s position. The legal representatives contend that SFM was not clearly categorized as a safety during the time of the alleged misdeeds, a stance supported by recent regulatory changes.

Meanwhile, federal prosecutors argue that Karony and his co-founders intentionally misled investors, and irrespective of regulatory subtleties, they must confront repercussions.

Former CTO Thomas Smith admitted guilt to securities fraud and wire fraud conspiracy in February 2025.

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Smith confessed to deceiving investors regarding the financial viability of the protocol and provided testimony against Karony, disclosing incriminating details about their internal operations. He is now testifying as a witness against Karony.

For the victims, this trial symbolizes their final chance for accountability. Following the bankruptcy declaration, the remaining assets of SafeMoon are scant, providing little for investors to retrieve. Even if some funds are recovered, it remains questionable whether victims will receive proper restitution.

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