SafeMoon CEO Seeks Case Dismissal Citing DOJ Policy Shift

Braden John Karony, the CEO of SafeMoon, has made a new attempt to dismiss the case against him and his firm by citing a recent directive from the US Department of Justice (DOJ). In a letter to New York federal court judge Eric Komitee, Karony's attorney, Nicholas Smith, referenced an April 7 memo from US Deputy Attorney General Todd Blanche. This memo announced the disbandment of the DOJ’s crypto unit and outlined a new policy that the DOJ will no longer pursue litigation or enforcement actions that impose regulatory frameworks on digital assets.

Blanche's memo stated that the DOJ is not a digital assets regulator and will avoid charging violations of securities and commodities laws when other charges, such as wire fraud, are applicable. This directive aims to prevent the DOJ from having to determine whether a digital asset is a security or commodity, a task typically reserved for regulatory bodies like the Securities and Exchange Commission (SEC).

Karony's counsel argued that this new directive should be considered by the court, as it effectively removes the basis for the charges against Karony and his firm. The footnote of the letter clarified that an exemption to this directive would only apply if the parties involved have an interest in defending that a crypto asset is a security, a stance that Karony does not take.

The charges against Karony and other SafeMoon executives, including creator Kyle Nagy and chief technology officer Thomas Smith, were filed in November 2023. The government alleged that the trio withdrew assets worth $200 million from the project and misappropriated investor funds. These charges include securities violations, wire fraud, and money laundering.

This is not the first attempt by Karony to dismiss the case. In February, he requested a delay in his trial, citing potential impacts from President Donald Trump’s proposed crypto policies. Later that month, Thomas Smith changed his plea to guilty, admitting his involvement in the alleged $200 million crypto fraud scheme. Nagy remains at large and is believed to be in Russia.

SafeMoon filed for bankruptcy in December 2023, following the twin cases from the SEC and DOJ. The firm also faced a significant hack in March 2023, with the hacker agreeing to return 80% of the stolen funds.

Karony's latest move to dismiss the case highlights the evolving regulatory landscape for digital assets. The DOJ's new directive could potentially impact ongoing and future cases involving crypto assets, as it shifts the focus away from regulatory determinations and towards more straightforward criminal charges. This development underscores the need for clear regulatory frameworks and consistent enforcement policies in the rapidly changing world of digital currencies.