"Instead of rewarding their clients as promised, their insatiable greed led them to spend millions of dollars on their own lavish desires."
Meme to McClaren
Surprise, surprise: former top executives of the once-ascendant meme coin SafeMoon, which according to Bloomberg ballooned in value by a staggering 19,000 percent at the height of 2021's crypto craze, have been charged by the US government for fraud on grounds that the C-Suite execs siphoned customer funds into their own pockets — and then used that investor cash to purchase things like McClaren and Porsche sports cars, luxury homes, and expensive vacations.
Also referred to as simply "SFM," SafeMoon coins started back in 2021 when its creators, per Reuters, minted "one quadrillion" of the digital tokens, promising potential customers they would take the coin "safely to the Moon" — a claim that echoes the promises of the Terra-Luna "stablecoin," which turned out to be not so stable after all.
Meanwhile, according to the SEC's allegations, customers were also told that any funds they invested into the coins would be "locked" in secure accounts. But as the SEC alleges, those security promises were lies.
As the meme coin's market capitalization "grew to more than $8 billion," reads a statement from the US Justice Department's Eastern District of New York, "the defendants" — SafeMoon founder Kyle Nagy, CEO Thomas Smith, and former CTO Braden Karony — "fraudulently diverted and misappropriated" a stunning $200 million from that so-called "locked" liquidity pool.
In other words, according to the SEC, these guys were plainly stealing from customers.
Things really aren't looking good for the SafeMoon boys, considering that, according to Reuters, prosecutors have the correspondence of Smith — the former CEO — texting "BRO WE DID IT" to an unidentified conspirator as they casually chatted about which luxury vehicles they might buy after Smith had sold tokens that could be traced back to the "locked" customer funds.
"Instead of rewarding their clients as promised, their insatiable greed led them to spend millions of dollars on their own lavish desires," said Ivan Arvelo, a US Department of Homeland Security agent involved in the investigation, in a statement. "Today, no luxury vehicles or sprawling real estate can protect them from the consequences of such crimes."
Smith and Karony have already been arrested, though Nagy, per Reuters, is apparently still on the lam. (Might we recommend checking Bali?) And according to officials, these arrests won't be the last we see in the embattled crypto space.
"As fraudsters increasingly use digital assets to mislead investors and misappropriate funds," said Breon Peace, United States Attorney for the Eastern District of New York, in a statement, "our Office will be at the forefront of pursuing them and their ill-gotten gains."
More on crypto bros: After Blowing up Crypto Industry, Exec Turns to Magic Mushrooms
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