| SafeMoon
Trio Indicted
for Crypto
Fraud Now
Karony Jailed
in Utah to be
Brought to
EDNY
by
Matthew Russell Lee, Patreon Book
Substack
EDNY COURTHOUSE,
Nov 13 – On November 2, 2023
SafeMoon's trio were indicted
in the U.S. District Court for
the Eastern District of New
York. Inner City Press covered
it.
Prosecutors
charged Braden John Karony,
Kyle Nagy, and Thomas Smith
with conspiracy to commit
securities fraud, conspiracy
to commit wire fraud and money
laundering conspiracy for
their roles in defrauding
investors in a decentralized
finance digital asset called
“SafeMoon” Earlier
today, Karony was arrested in
Provo, Utah...
On November
3, Smith was arraigned, bond
document on Patreon here
....
On November 8,
EDNY prosecutors wrote
"seeking the detention of the
defendant Braden John Karony."
Full memo on Patreon here.
But Karony was
ordered free on bond, by
Magistrate Daphne A. Oberg
(whose previous freeing of
January 6 defendant John Earle
Sullivan Inner City Press
previously covered here).
The EDNY prosecutors have
written to the assigned
District Judge to appeal /
seek a stay, 6-page letter on
Patreon here.
On Sunday
November 12 Karony's lawyers
wrote in that "the
Government’s argument that
detention is warranted because
the charges involve
cryptocurrency is contrary to
the bail statute’s requirement
for the Government to show
that no conditions of pretrial
release can “reasonably
assure” this defendant’s
appearance (id. (emphasis
added)); otherwise, without
more, every U.S. citizen
facing criminal charges in the
digital asset space would be
detained through trial, in
effect establishing an
unrebuttable crypto
presumption." Full letter on
Patreon here.
On November 13,
Inner City Press live tweeted
the bail appeal in which
Karony was ordered detained
and to be brought to EDNY, thread:
OK - now in
crypto fraud case of US v.
Karony / SafeMoon, EDNY
hearing on if Karony will be
released on bail by / in Utah
federal court
Calling the case!
Judge Komitee: We are here on
the government's motion to
detain Mr. Karony pending
trial. Government?
AUSA: There are
inaccuracies that have been
put forth. But I'll first
address our main argument:
risk of flight, risk of
obstruction of justice
AUSA: Mr. Karony
has significant foreign
ties... Here, he only came
back for a civil case and a
memorial service. His
co-conspirator got a
subpoena--
Judge: And he
returned to the US. AUSA: Tom
Smith had ties to the US.
Karony's incentives have
changed
AUSA: He has
assets from the SafeMoon piggy
bank, he took it for travel
and luxury expenses. Judge:
How much money do you see this
defendant having withdrawn for
himself improperly? AUSA: Over
$300 million in money
diverted. To Mr. Karony, in
the 10s of millions
AUSA: We are not
aware of all of Mr. Karony's
wallets. Judge: Can the
US freeze the wallets? AUSA: I
am reluctant to speak on it
publicly. We are concerned
about dissipation.
Judge: If a defendant buried
money, that's one thing. But
it may not be a good analogy
Judge: I
need to know more. AUSA:
There's a European country
with limited transparency
which Mr. Karony had moved
assets. So this is not like a
convention stock fraud case.
Judge: I'm far
from any sort of expert in the
custody and trading of crypto
assets. AUSA: There is $1.2
million in a private, unhosted
wallet we do not have access
to... We are moving
independent of his ability to
dissipate victim funds,
though.
AUSA: Mr.
Karony's fiancee is overseas.
Judge: Is she a US or UK
citizen? AUSA: UK, is our
understanding. He has no
communication with his family
in the US. He was selling his
house in Utah. He's more like
Kyle Nagy, who has already
fled the US
Judge: What
about this lawsuit in Utah
with his mother? AUSA: We
understand it's over
intellectual property issues.
Judge: What kind of IP? 2d
AUSA: It's about technology in
Africa, The Gambia.
Judge: I
understand that one or both
parents worked for the CIA?
AUSA: Uh, I believe one was...
There was falling out with
relation to that business,
culminating with the
defendant's lawsuit against
his parents Karony's lawyer:
My client would reside in
Miami, his fiancee would go
there.
Judge: That's a
rental? Karony's lawyer: It
is... He could rent an
apartment in NY if you prefer
Judge: How would he pay the
rent except with ill gotten
gains? 2d defense lawyer
speaks-
Judge: One
lawyer at a time. 1st
defense lawyer: It's his
counsel in Utah. Judge:
On the bond, I don't see any
solid suretors. My stalking
horse proposal would include
that. Mr. Sims? 2d lawyer
Sims: He could not make jail
calls in Salt Lake
AUSA: It's just a
personal recognizance bond.
Judge: Let me put this out
there: it is not obvious to me
there are not conditions to
assure his appearance. But
those conditions have not
materialized yet. Instead,
it's a rental in Florida
Karony's
lawyer: My client flew in to
Miami, and was allowed to fly
to Utah where they arrested
him. We could post the house
-- Judge: But doesn't the
government allege it was
bought with fraud proceeds?
Karony's lawyer: They say the
fraud ended a year ago.
AUSA: The
defendant was arrested the
same day the indictment was
returned. The home in Utah is
subject to forfeiture. We'd
like him removed in custody to
face proceedings in New York.
Judge: That's
where it seems we all are
Judge: I order Mr. Karony to
be detained pending his
transfer to the EDNY. I will
be happy to reconsider this if
there is a most robust bail
package. Adjourned.
after the judge
got off, a voice said,
SafeMoon Army, out.
Inner City Press
will follow the case(s)
***
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