Legal Maneuvering by Braden John Karony
Braden John Karony, who leads the cryptocurrency company SafeMoon, is invoking a recent change in the U.S. Department of Justice (DOJ) policy as he seeks to have legal charges against him and his firm dismissed. According to a letter dated April 9, presented to Judge Eric Komitee of the New York federal court, Karony’s lawyer, Nicholas Smith, referenced a memo issued by Deputy Attorney General Todd Blanche on April 7. This memo announced the dissolution of the DOJ’s specialized crypto enforcement unit.
DOJ Policy Changes
In the memo, Blanche emphasized that the DOJ does not serve as a regulatory body for digital assets and outlined that the department would refrain from pursuing legal action that could impose regulatory rules on cryptocurrencies. The decision also involves caution regarding charges related to securities and commodities unless they could be pursued under fraud statutes without determining the status of a digital asset as a security or commodity. Notably, a footnote in the correspondence specified that this new policy could be overridden if involved parties intended to defend the classification of a crypto asset as a security; however, Smith clarified that Karony does not intend to make that argument.
Allegations Against Karony and SafeMoon
In November 2023, Karony, along with SafeMoon’s chief technology officer Thomas Smith and project creator Kyle Nagy, faced serious allegations of securities violations, wire fraud, and money laundering from both the Justice Department and the U.S. Securities and Exchange Commission (SEC). Authorities claim the trio wrongfully withdrew $200 million in assets and misused funds from investors.
In a dramatic twist, Smith admitted guilt in February 2024, confessing participation in the crooked scheme, while Nagy remains untraceable, reportedly hiding in Russia.
Previous Legal Attempts
This latest letter is not the first move by Karony to dismiss the case; he previously requested a postponement for his trial, which was set to start on March 31, arguing that proposed cryptocurrency regulations by the Trump administration could influence the proceedings.
SafeMoon itself has faced severe troubles, filing for bankruptcy in December 2023 soon after being confronted with legal actions from both the SEC and DOJ. Moreover, in a separate incident, the company suffered a hack in March 2023, but the perpetrator agreed to return 80% of the stolen funds.
