SafeMoon promised its liquidity was locked. Prosecutors say more than $200 million wasn't

On November 1, 2023, the U.S. Department of Justice unsealed an indictment charging three men behind SafeMoon — a meme coin launched in the 2021 bull market under the slogan 'safely to the moon.' TRM Labs identified them as Braden John Karony, the chief executive; Thomas Smith, the chief technology officer; and Kyle Nagy, the token's creator.

The charges were serious: conspiracy to commit securities fraud, conspiracy to commit wire fraud, and money-laundering conspiracy, per TRM Labs. The Securities and Exchange Commission filed a parallel civil suit accusing the company and its executives of fraud and of selling unregistered crypto securities, CoinDesk reported.

The 'locked' promise

The alleged con turned on a single reassurance. The team told investors that SafeMoon's liquidity pools were 'locked,' which would make it impossible for insiders to execute a 'rug pull,' and that developers were not trading the token for their own gain, according to TRM Labs. In reality, prosecutors say, large portions of the liquidity were never locked, and insiders retained access they used to divert and misappropriate tokens.

The sums were large. More than $200 million was withdrawn from the project, CoinDesk reported, wiping out billions in market value. TRM Labs traced roughly $860,000 in Binance Coin — sourced from SafeMoon's liquidity pool — that Smith allegedly used to buy a custom Porsche 911 and an NFT; CoinDesk cataloged luxury homes and multiple McLarens among the insiders' purchases.

'The defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves,' said Breon Peace, the U.S. Attorney for the Eastern District of New York, as quoted by CoinDesk. Karony and Smith were arrested; Nagy, per both TRM Labs and CoinDesk, remained at large.

Why 'locked liquidity' isn't a guarantee

• A promise that liquidity is 'locked' is only as good as the code and custody behind it — verify the lock on-chain, and check who holds the keys.
• 'The team can't rug' is a claim to test, not trust; regulators say SafeMoon's insiders kept access they'd sworn they had given up.
• Marketing that fuses safety language with moon-shot upside ('safely to the moon') is a rhetorical red flag, not a risk control.
• Follow the treasury: if project funds are moving to exchanges and then to Porsches and homes, that is the story.

SafeMoon's name was its whole pitch — the idea that this token, unlike the others, had engineered away the rug. The indictment is a reminder that a reassurance written into a brand is not a reassurance written into the contract, and that 'trust us, it's locked' has to be checked before, not after.

— Sources: [TRM Labs](https://www.trmlabs.com/resources/blog/doj-unseals-indictment-in-fraudulent-crypto-scheme-safemoon) · [CoinDesk](https://www.coindesk.com/policy/2023/11/01/sec-charges-safemoon-team-with-fraud-offering-unregistered-crypto-securities)