SafeMoon Founder Braden Karony’s conviction marks the collapse of a once-hyped DeFi project. Found guilty of securities fraud, wire fraud, and money laundering, Karony faces up to 45 years in prison. This article details the crypto fraud scandal that shattered investor trust and reshaped the blockchain investment landscape.
A Deceptive Scheme Unraveled
Price fluctuation of SafeMoon’s SFM token, screenshot from CoinMarketCap at 03 PM on May 22, 2025.
SafeMoon Founder Karony was convicted on May 21, 2025, in a New York federal court for orchestrating a crypto fraud scandal. SafeMoon, launched in 2021, promised a revolutionary profit-sharing model with a 10% transaction tax—half redistributed to token holders, half locked in a liquidity pool for trading stability. Prosecutors revealed this was a facade, with Karony and accomplices secretly accessing the pool, siphoning millions for personal gain.
U.S. Attorney Joseph Nocella, Jr. stated, “SafeMoon was anything but safe, a pipe dream for investors misled by Karony.” The blockchain investment landscape suffered as the scheme eroded confidence, with SafeMoon’s market cap plummeting from $8 billion at its peak to $7.2 million today, per CoinGecko data.
Profiting at Investors’ Expense
SafeMoon Founder Karony netted over $9 million by trading SafeMoon tokens at market highs, despite public claims of non-involvement. Using pseudonymous wallets and unhosted exchange accounts, he concealed his actions, spending the funds on luxury homes, an Audi R8, a Tesla, and custom trucks. The DeFi project collapse left investors reeling, with daily trading volume now below $1 million, a far cry from its 2021 high of $43.96 million.
Co-conspirator Thomas Smith pleaded guilty and testified against Karony, awaiting sentencing. Kyle Nagy, another key figure, remains at large, reportedly in Russia. The FBI, IRS, Homeland Security, and SEC led the investigation, exposing the depth of the crypto fraud scandal.
SafeMoon’s Fall and Rebirth Attempt
SafeMoon Founder Karony’s actions led to the project’s bankruptcy in December 2023, after which VGX Foundation took over. Once a DeFi darling, SafeMoon declared in February 2025 a pivot to a Solana-based memecoin, burning most SFM tokens. Lacking a development team, roadmap, or long-term vision, it now operates as a community-driven token, a shadow of its former self in the blockchain investment landscape.
Online discussions reflect investor frustration, with some lamenting losses exceeding 99.7% from SFM’s all-time high, per TradingView. Others criticize the memecoin pivot as a desperate bid to salvage relevance amid the DeFi project collapse.
Conclusion
SafeMoon Founder Braden Karony’s conviction for fraud and money laundering underscores the risks in unregulated crypto markets. Facing 45 years in prison, his actions triggered a DeFi project collapse, leaving SafeMoon’s token value at $7.2 million. The crypto fraud scandal highlights the need for stronger oversight in the blockchain investment landscape, as investors navigate the fallout of this cautionary tale.
