Key Takeaways
- Federal prosecutors had objected to Karony’s bail, citing concerns about community safety.
- The decision by Karony’s lawyers at Petrillo Klein & Boxer to withdraw from representing him was influenced by the lack of funds.
SafeMoon CEO Braden John Karony has been released on bail after being arrested on charges of securities fraud, money laundering, and conspiracy to commit wire fraud. However, his legal team has decided to withdraw from representing him due to a lack of funds, leaving him to communicate with a public defender.
Karony and SafeMoon CTO Thomas Smith were arrested in November 2023, but SafeMoon’s creator, Kyle Nagy, remains at large. During a hearing on February 9th in New York, Magistrate Judge Taryn Merkl granted Karony bail, setting a $3 million bond. Karony’s parents, based in Utah, signed on as his custodians, and he was subjected to cyber and electronic monitoring, along with a ban on engaging in crypto promotional activities.
The decision by Karony’s lawyers at Petrillo Klein & Boxer to withdraw from representing him was influenced by the lack of funds. Adam Schulman, a partner at the law firm, cited the firm’s initial agreement with SafeMoon to cover Karony’s legal fees. However, SafeMoon later failed to provide the necessary funds, leading to the law firm’s bankruptcy filing.
Despite making a partial payment for legal services, the funds were depleted, and the government seized proceeds from the sale of Karony’s Utah home, which were intended to cover legal fees. This situation left Karony without adequate legal representation, leading to the appointment of a public defender.
Federal prosecutors had objected to Karony’s bail, citing concerns about community safety and flight risk. The SEC had previously accused SafeMoon and its executives of orchestrating a fraudulent offering of crypto securities, resulting in significant market losses and misuse of project funds for personal gain.
SafeMoon, introduced in 2021, was marketed as a meme coin promising locked staked funds in a liquidity pool. However, the SEC alleged that large portions of the liquidity pool were never locked, and executives used funds for personal expenses such as homes, travel, and luxury cars.
Meanwhile, SafeMoon CTO Thomas Smith remains in custody, with his legal team seeking permission for him to travel to Los Angeles and Henderson for work-related events in February and March.
