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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