SafeMoon

SafeMoon emerged as a high-profile cryptocurrency project promising revolutionary decentralized finance with locked liquidity pools designed to protect investors. However, beneath its flashy marketing and soaring initial valuation lay a massive fraudulent scheme orchestrated by its executives. Rather than safeguarding investor funds, key figures allegedly diverted millions for personal enrichment, engaging in elaborate money laundering operations involving cryptocurrencies and luxury asset purchases. This scandal starkly exposed the vulnerabilities and risks inherent in the largely unregulated crypto space, underscoring how deceptive practices can exploit investor trust and evade traditional financial oversight. The case has had significant ramifications for global crypto regulation and enforcement, highlighting the urgent need for stringent controls in the decentralized finance ecosystem.

SafeMoon, launched in early 2021, was promoted as a revolutionary crypto token with locked liquidity pools ensuring investor safety. Contrary to promises, the founders and executives secretly retained control and diverted millions of dollars from investors’ funds for personal gain. The U.S. Department of Justice and SEC uncovered a scheme involving securities fraud and money laundering, where illicit proceeds were laundered through complex crypto transaction networks to purchase luxury assets such as sports cars and real estate. Key figures have been arrested, tried, and convicted, marking one of the significant crypto fraud and money laundering cases globally, highlighting the vulnerabilities within decentralized finance and crypto investment schemes.

Countries Involved

SafeMoon’s operations and the alleged fraudulent and money laundering activities have a primarily strong connection to the United States, where the key executives are charged and trials are taking place. However, given the global trading nature of cryptocurrency, investors and transactions have spanned multiple countries, involving global crypto exchanges and international wallet transactions. There are indications that funds and actors have cross-border links, including a co-founder reportedly fleeing to Russia. This delineates a multi-jurisdictional dimension to the case as crypto markets are inherently international, enabling asset movements and laundering attempts beyond a single country’s borders.

Date Discovered / Reported

The fraudulent scheme involving SafeMoon was discovered and publicly reported in late 2023, with the United States Department of Justice unsealing indictments and charges in November 2023. Legal actions and investigations spanned prior months and years back to the token’s launch in March 2021. Court proceedings and media reports intensified through 2024 and into 2025 alongside verdicts and convictions.

Cryptocurrency Involved

SafeMoon Token (SFM), Binance Coin (BNB)

Type of Crime

The crimes involved in this case include securities fraud, wire fraud, and money laundering. The fraudulent scheme misled investors about the security and liquidity of their investments while diverting millions for personal gain. Money laundering aspects focused on disguising the illegitimate origins of the diverted funds through complex crypto wallet transfers, routing transactions through multiple accounts, and converting assets to obscure trails.

Entities Involved

Key entities involved are SafeMoon LLC and its principal executives: founder Kyle Nagy, CEO Braden John Karony, and former CTO Thomas Smith. These individuals are accused of orchestrating and executing the criminal scheme. Other entities involved include various un-hosted cryptocurrency wallet addresses, centralized exchange accounts used for lavishing stolen funds, and third parties receiving assets for lavish purchases. The U.S. Department of Justice, Securities and Exchange Commission, FBI, IRS-Criminal Investigations, and Homeland Security Investigations were key enforcement bodies involved.

PEP Involvement

No publicly confirmed information suggests the involvement of Politically Exposed Persons (PEPs) in the SafeMoon money laundering scheme. The primary figures charged are corporate executives associated with SafeMoon’s operations.

Laundering Techniques Used

The laundering techniques involved complex transaction routing and the use of multiple un-hosted crypto wallet addresses to mask illicit funds. The defendants transferred misappropriated tokens through numerous accounts and centralized exchanges to complicate tracking. They also converted SafeMoon tokens into other cryptocurrencies such as Binance Coin, which were then used to purchase luxury vehicles (including a Porsche 911), opulent real estate, and other high-value assets. These methods seek to obscure the origin of laundered money by layering across different wallets and exchanges, complicating forensic analysis.

Estimated Value Laundered

The estimated value laundered through this scheme is in the range of over $200 million USD. Reports highlight that tens of millions of investor dollars were diverted, with the total misappropriated funds exceeding this amount as the scheme unfolded. The magnitude correlates with SafeMoon’s initial multi-billion dollar market valuation and widespread investor involvement.

Transaction Analysis Summary

Investigators traced millions in diverted funds through blockchain and cryptocurrency forensic methods, identifying patterns of transaction layering and obfuscation. The defendants retained access to liquidity pools they claimed were locked, enabling them to withdraw and move large sums of crypto assets. The transactions included intricate routing through un-hosted wallets and exchange accounts, designed to evade detection. Movement of funds was linked directly to high-value asset purchases and personal enrichment, confirming the fraudulent diversion of investor assets.

Regulatory/Enforcement Actions Taken

Regulatory and enforcement actions include criminal indictments and charges by the U.S. Department of Justice for conspiracy to commit securities fraud, wire fraud, and money laundering. The Securities and Exchange Commission filed civil charges for unregistered token offerings and securities law violations. Arrests have been made (two executives arrested), trials conducted, and convictions secured against key figures, with ongoing investigations for others at large. The case is part of broader governmental efforts to regulate and crack down on fraudulent crypto schemes and illicit money flows.

Links to Reports / Sources

Case Title / Operation Name:

SafeMoon Money Laundering and Fraud Scheme

Country(s) Involved:

United States

Platform / Exchange Used:

Binance Smart Chain, multiple centralized exchanges used for laundering and trading

Cryptocurrency Involved:

SafeMoon Token (SFM), Binance Coin (BNB)

Volume Laundered (USD est.):

Over $200 million USD

Wallet Addresses / TxIDs :

Numerous private un-hosted crypto wallets and pseudonymous exchange accounts involved

Method of Laundering:

Layering via complex transaction routing, use of un-hosted wallets, exchange conversions, investment in luxury assets

Source of Funds:

Fraudulent investor funds obtained through securities and wire fraud schemes

Associated Shell Companies:

No publicly disclosed specific shell companies involved

PEPs or Individuals Involved:

Kyle Nagy (Founder), John Karony (CEO), Thomas Smith (CTO) – SafeMoon executives accused of fraud and laundering

Law Enforcement / Regulatory Action:

DOJ and SEC criminal indictments, arrests, securities law charges, convictions, ongoing prosecution

Year of Occurrence:

2023 (Indictments unsealed and investigations reported)

Ongoing Case:

Ongoing

AML Network Risk Rating:

🔴 High Risk