SafeMoon

SafeMoon LLC
Company type	Limited liability company
Industry	Cryptocurrency, blockchain technology
Founded	March 2021; 5 years ago
Fate	Filed for Chapter 7 bankruptcy in December 2023; acquired by VGX Foundation
Headquarters	United States
Key people	Braden John Karony (CEO)
Products	SafeMoon token, SafeMoon wallet, Safemoon Swap (decentralized exchange)

Adapted from the English Wikipedia article SafeMoon, available under CC BY-SA 4.0Updated 27 November 2025

SafeMoon LLC was a U.S.-based firm specializing in cryptocurrency and blockchain technology, established in March 2021. It introduced the SafeMoon token (SFM), which functioned on the BNB Chain blockchain network. The token implemented a 10% fee on transactions, redistributing half of this amount to existing holders while converting the other half into Binance Coin (BNB) stored in wallets managed by the company. At its height in April 2021, SafeMoon's market capitalization reached $17 billion.

The enterprise debuted a simple cryptocurrency wallet with plans to expand its product lineup in the crypto space. Nevertheless, SafeMoon encountered major controversies, including allegations of operating as a ponzi scheme, failing to deliver on promised offerings, facing multiple class-action lawsuits, and confronting serious fraud accusations. In November 2023, both the SEC and the United States Department of Justice filed charges against SafeMoon and its leadership for fraud, unregistered securities sales, and money laundering. By December 2023, SafeMoon sought protection under Chapter 7 bankruptcy and was later acquired by the VGX Foundation.

2021: SafeMoon version 1

Launched in March 2021, SafeMoon’s name combines "Safe" with "Moon," a term from crypto jargon indicating rapid price increases. Initially lacking functional utility and an established team, SafeMoon experienced a dramatic surge of 23,225% between March and April 2021. This growth was fueled by endorsements from celebrities such as Lil' Yachty, Nick Carter, Logan Paul, widespread social media enthusiasm, listings on exchanges, and retail investor interest. Despite this momentum, critics highlighted the token's absence of practical application. Following this period, several endorsers were targeted by class-action lawsuits accusing them of participating in pump-and-dump schemes.

After the price rally, Braden John Karony took over as CEO and registered SafeMoon as a limited liability company with the goal of developing utility for the token. Karony had previously served as an analyst at the U.S. Department of Defense from 2015 to 2021.

In May 2021, SafeMoon proposed "Project Pheonix" to The Gambia with intentions to provide technological solutions aimed at fostering innovation and education while encouraging adoption among unbanked populations. The initiative involved partnerships with local authorities and was overseen by ECG LC, a firm associated with Karony’s family. However, by August 2022, Karony cited supply chain disruptions as the reason for halting operations in West Africa—a justification contested in ongoing legal disputes connected to Project Pheonix.

June 2021 marked the beta release of the SafeMoon wallet application; it officially launched on Google Play in September and became available on the App Store in October 2021. Critics accused the wallet of being a replica of Binance’s Trust Wallet. CTO Thomas Smith left SafeMoon in December 2021 to join StrikeX but was subsequently terminated following fraud allegations revealed by investigator Stephen Findeisen.

2022: Migration to SafeMoon V2

In December 2021, SafeMoon introduced Version 2 of its token (SafeMoon V2), which updated the initial contract structure. To transition to V2, holders were required to migrate their tokens using SafeMoon’s decentralized exchange platform called "Safemoon Swap" before a set deadline or face a punitive 100% tax on their holdings. In April 2022, SafeMoon unveiled plans for the Safemoon card—a debit card permitting payments with SafeMoon and other cryptocurrencies subject to a 2.5% transaction fee. This offering received criticism when compared to competitors like Crypto.com that provide crypto rewards instead. Although initially scheduled for July 2022 launch, the card had not been released by December 2022.

Since Karony’s leadership began in 2021, SafeMoon has aimed to establish its own cryptocurrency exchange by October 2021; however, this timeline was postponed first to December 2022 and then further delayed until late 2023. Additionally, the company intends to develop its own blockchain network and hardware wallet while positioning itself as a comprehensive Internet of Things infrastructure provider utilizing its blockchain technology.

2023: Liquidity Pool Breach and Fraud Charges

On March 29, 2023, a vulnerability in SafeMoon's liquidity pool smart contract was exploited by hackers, resulting in the theft of $9 million in SFM tokens and triggering a significant price decline. Following discussions, the attacker refunded $7 million but retained $2 million.

On November 1, 2023, federal authorities indicted CEO Braden John Karony, founder Kyle Nagy, and ex-employee Thomas Smith on charges including securities fraud, wire fraud, and money laundering. The allegations centered on deceptive claims regarding locked liquidity and the misappropriation of millions for personal benefit as SafeMoon’s market capitalization surpassed $8 billion. Karony and Smith were taken into custody, while Nagy remained a fugitive. The case was brought forward by the SEC and Department of Justice with assistance from the FBI.

In December 2023, SafeMoon filed for Chapter 7 bankruptcy protection and was subsequently acquired by the VGX Foundation.

In 2024, Kyle Nagy reappeared in Russia, where he lodged a police report accusing Federal Security Service agents of extortion, demanding $4.5 million to permit his continued residence.

Comparison to a Meme Coin

In May 2021, SafeMoon was categorized as a "meme coin" alongside Dogecoin and Shiba Inu, largely fueled by the 2021 cryptocurrency market surge. Observers noted the developers lacked significant prior achievements, with financial analysts describing SafeMoon as "the opposite of safe" due to its absence of practical applications.

Security Concerns

A security audit conducted by CertiK in May 2021 uncovered a critical flaw: project owners held tokens funded through SafeMoon’s seller fees. Specifically, an owner-controlled address possessed liquidity pool tokens from the SafeMoon-BNB pair, effectively granting control over fees generated from sales. This vulnerability was later implicated in the 2022 Safemoon fraud allegations. Furthermore, research from London Capital emphasized that the Manual Burn function combined with the controlling entities’ substantial coin holdings exposed SafeMoon to potential manipulation risks.

Associations with Ponzi Schemes

After experiencing a twelvefold price increase in April 2021, financial experts likened SafeMoon to a ponzi scheme or pyramid scheme, noting that profits for early investors relied heavily on continuous new investor participation. The token’s structure incorporated a 10% selling fee, meaning sellers lost $100 on every $1,000 transaction. Critics argued this mechanism discouraged selling by penalizing investors immediately upon attempting to liquidate holdings. A portion of this fee was redistributed among existing token holders and a wallet managed by the project’s creators.

Fraud Allegations in 2022

In April 2022, independent crypto investigator Stephen "Coffeezilla" Findeisen accused SafeMoon’s team of embezzling millions. He claimed CEO Karony withdrew funds from the liquidity pool, which explained unusual price movements. Findeisen tracked transfers from the liquidity wallet to a "Gabe (6abe) wallet," which then moved assets to an entity controlled by Karony. Former CTO Thomas "Papa" Smith countered by stating that withdrawals occurred before Karony’s leadership; however, Findeisen presented blockchain records showing a transfer of 36.7 trillion tokens dated March 5, 2021.

Class-action lawsuits

On 18 February 2022, SafeMoon faced a class-action lawsuit accusing it of orchestrating a pump and dump scheme. The defendants named included Logan Paul, musician Nick Carter, rappers Soulja Boy and Lil Yachty, as well as influencer Ben Phillips, all of whom were alleged to have promoted SafeMoon using potentially deceptive information. That same day, the U.S. 11th Circuit Court determined that the Securities Act of 1933 governs targeted solicitations made through social media platforms. Findeisen supported allegations that Paul and Phillips participated in pump-and-dump activities during a timeframe when SafeMoon’s token value plummeted by 96%. On 22 August 2022, defendant David Portnoy was dismissed from the case after it was established he neither received payment nor profited from his involvement with SafeMoon.

In May 2022, another group of SafeMoon investors initiated a separate class-action lawsuit alleging securities fraud, with legal representation by Scott+Scott. This lawsuit was voluntarily dismissed without prejudice in November 2022, preserving the option for future legal action.

Project Pheonix lawsuit

Within the framework of Project , Emanations Communications Group LC (ECG) was formed under the leadership of Jennifer Karony, mother of SafeMoon CEO John Karony, to supply antenna technology to The Gambia. The company was subsequently taken over by Lex Vest Ltd. In June 2021, John invested $5 million—purportedly sourced from SafeMoon’s locked liquidity pool—in exchange for a 33.34% ownership stake and an agreement that ECG would cover his personal expenses. Due to regulatory concerns and ongoing litigation involving John and SafeMoon, ECG later refused further investments from him. Following this, John initiated legal proceedings against ECG alleging breach of contract and accusing his mother of manipulating the legal process.

ECG developed technology intended for Project , which John received in December 2021. Court filings reveal that John publicly disclosed information about this technology on SafeMoon’s website and social media platforms against ECG’s advice, thereby exposing potential patent and intellectual property risks. In March 2022, John proposed paying Project partners Sankung Jawara and Pa Alieu Jawara $350,000 upfront—and eventually up to $4.5 million—to exclude Jennifer Karony from their agreement. Both partners declined, citing concerns about circumventing established legal and parliamentary protocols related to the banking project.

Jennifer Karony criticized John for lacking a concrete plan for Project , suggesting he was more focused on photographing the laboratory to support claims of owning facilities dubbed "Area 32" or "DarkMoon" labs. The ensuing lawsuit contributed to the project's termination. On 27 August 2022, John attributed the halt of his West African operations to supply chain disruptions—a claim contested by his mother.

Liquidity pool hack

On 29 March 2023, nearly $9 million worth of SafeMoon tokens were stolen from its liquidity pool after attackers exploited a vulnerability in its smart contract, leading to a significant drop in the token’s market price. Following negotiations, the hacker returned approximately 80% ($7 million) of the stolen assets while retaining $2 million.

Fraud indictment

On 1 November 2023, federal authorities indicted SafeMoon founders Braden John Karony, Kyle Nagy, and Thomas Smith on charges including securities fraud, wire fraud, and money laundering. The US District Court for the Eastern District of New York alleged that the defendants deceived investors regarding the supposed inaccessibility of "locked" liquidity funds and diverted millions for personal enrichment while SafeMoon’s market capitalization surpassed $8 billion. Karony and Smith were apprehended; Nagy remained at large. The investigation was conducted by the SEC and Department of Justice with assistance from the FBI. After a twelve-day trial in Brooklyn concluding on 21 May 2025, Karony was found guilty on all counts.

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