Braden Karony, former CEO of SafeMoon, is set to face trial in May on multiple fraud charges, even as the U.S. Department of Justice (DOJ) signals a broader shift away from aggressive crypto-related prosecutions. Karony has pleaded not guilty and is currently out on a $3 million bond, while his legal team seeks to delay the trial in light of changing regulatory perspectives.
DOJ Unmoved by Recent Enforcement Memo
In an April 18 court filing, U.S. Attorney John Durham from the Eastern District of New York confirmed that the DOJ will move forward with its case against Karony, dismissing the notion that recent policy changes would impact this prosecution. This comes shortly after a memo by Deputy Attorney General Todd Blanche suggested that the department may step back from pursuing crypto cases that rely on “regulation by prosecution.”
Karony is charged with conspiracy to commit securities fraud, wire fraud, and money laundering, with prosecutors alleging he misused millions in SafeMoon (SFM) tokens between 2021 and 2022.
Defense Cites Regulatory Uncertainty
Karony’s defense team argues that the evolving regulatory environment could invalidate the basis for the charges. They point to the Trump-era rollback of crypto enforcement, including the SEC’s decision to drop high-profile cases against major firms such as Ripple, Coinbase, and Kraken, as evidence that the classification of tokens like SafeMoon as securities may no longer hold.
With Commissioner Hester Peirce leading a task force to re-evaluate digital asset regulation and memecoins now considered outside the SEC’s jurisdiction, the defense contends that moving forward with the case contradicts current legal interpretations.
SafeMoon Case as a Litmus Test
Despite the broader policy retreat, the DOJ’s decision to press on with the SafeMoon case raises questions about the limits of the new enforcement posture. The case could either represent a final remnant of the Gensler-era crackdown—or serve as a precedent-setting exception moving forward.
Last year, the SEC charged Karony, SafeMoon Founder Kyle Nagy, SafeMoon US, and executive Thomas Smith, accusing them of orchestrating a fraudulent scheme involving the unregistered sale of the SFM token, which was heavily promoted with promises of high returns.
Looking Ahead
Whether the DOJ’s pursuit of Karony will withstand the current shift in regulatory sentiment remains to be seen. For now, the trial is expected to proceed as planned, positioning the SafeMoon saga as a potentially pivotal moment in the intersection of crypto innovation and federal oversight.