Crypto Corner: The Safemoon Saga Continues Despite DOJ Policy Shift
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Cryptocurrency Investigations Not Over: Federal Agencies Persist in Safemoon Probe, Undeterred by DOJ's Crypto Policy Alterations
The U.S. Department of Justice (DOJ) remains firm on the prosecution of cryptocurrency Safemoon's founders, disregarding the recent cryptocurrency policy changes. A federal judge has been informed that the case will proceed to trial.
Digging Deeper
In a memo circulated earlier this month, the DOJ advised federal prosecutors to shun pursuing crypto cases where determining the securities status of assets would be required. However, DOJ attorneys have conducted an internal review to assess whether the Safemoon case aligns with the department's new digital asset rules. Conclusively, they have decided that the Safemoon case should proceed to trial on all counts.
This move stands in stark contrast to the dismissal or pausing of certain crypto cases due to the relaxation of enforcement postures regarding digital assets. Early last year, Safemoon's founders were arrested and charged with securities fraud, wire fraud, and money laundering, according to the indictment. The charges alleged that the founders had misled investors about the liquidity of their cryptocurrency, SFM, claiming it was locked, when in reality, millions of dollars worth were diverted for personal benefits.
The presiding judge, Eric Komitee, denied a motion to dismiss the case on the grounds that SFM is not a security. Komitee reasoned that the SFM's security status should be decided by the jury at trial, rather than being determined prematurely.
Should the defendants be found guilty on all charges, former CEO John Karony could be facing a substantial prison sentence, with each count of wire fraud and money laundering carrying up to 20 years, and securities fraud up to 5 years.
The Bigger Picture
Despite the policy shift at the DOJ, the DOJ's commitment to pursuing fraud allegations in the cryptocurrency sector remains steady. The case emphasizes the DOJ's relentless pursuit of serious fraud allegations even as the regulatory environment evolves.
Interestingly, the Securities and Exchange Commission (SEC) has also filed parallel charges against the Safemoon executives, accusing them of unregistered sales of SFM and price manipulation.
As for the Safemoon cryptocurrency itself, it peaked at over $1 billion market capitalization in early 2022 but has now dwindled down to slightly more than $13 million. Weeks after the founders' arrest, the company filed for bankruptcy.
Stay tuned for more updates on this developing story.
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- The DOJ remains determined to prosecute Safemoon's founders, disregarding the recent shift in cryptocurrency policies.
- The federal judge presiding over the case has been informed that the trial will proceed as planned.
- The DOJ's internal review found that the Safemoon case aligns with the department's new digital asset rules, despite the earlier memo advising against pursuing cases requiring the determination of securities status.
- The founders of Safemoon are charged with securities fraud, wire fraud, and money laundering, with millions of dollars worth of tokens allegedly misappropriated for personal use.
- Judge Eric Komitee denied a motion to dismiss the case, reasoning that the SFM's security status should be decided by the jury at trial.
- If found guilty, Safemoon's former CEO, John Karony, could face a prison sentence of up to 20 years for each count of wire fraud and money laundering, and up to 5 years for securities fraud.
- The DOJ's commitment to pursuing fraud allegations in the cryptocurrency sector remains firm, demonstrating a relentless pursuit of serious fraud allegations amidst evolving regulatory environments.
- The Securities and Exchange Commission (SEC) has also filed parallel charges against the Safemoon executives, accusing them of unregistered sales of SFM and price manipulation.
- The Safemoon cryptocurrency peaked at over $1 billion market capitalization in early 2022 but has since dwindled down to slightly more than $13 million, following the founders' arrest and the company's subsequent bankruptcy filing.
