What made Safemoon 50% off? SEC Fraud Charges Shine a Light.

The Securities and Exchange Commission (SEC) has charged SafeMoon, founder Kyle Nagin, CEO John Caroni, and CTO Thomas Smith with masterminding a massive fraud scheme. This scheme was carried out by Safe Moon, an unregistered sale of crypto asset security.

The SEC's complaint shows how the defendants promised to increase the token's price “at peace with the moon.” However, the reality was quite the opposite. They wiped out billions in market capitalization, removed over $200 million worth of crypto assets from the project, and diverted investors' money for personal gain.

When the SEC accuses executives of fraudulent activities, SafeMoon's value shows half

David Hirsch, chief of the Crypto Assets and Cyber ​​Unit (CACU) of the SEC's enforcement division, expressed deep concern. He emphasized that decentralized finance (DeFi) operations are vulnerable to fraudsters due to the lack of required disclosure and accountability.

Kyle Nagy, like Hirsch, exploits these loopholes to amass wealth at the expense of others.

“Decentralized finance claims to bring transparency and predictability, but unregistered offerings lack the disclosure and accountability the law requires, and they attract fraudsters like Kyle Nagy, who exploit these weaknesses to enrich themselves,” Hirsch said.

The trading narrative spun by Nagy assured investors of safe money in SafeMoon's liquidity pool. Conversely, significant portions of this pool remain open. This allowed Nagy, Caroni, and Smith to splurge on luxury cars, lavish mansions, and lavish vacations.

Read more: 15 most common crypto scams to look out for

Jorge G. Tenrero, deputy head of CACU, echoed his warning to investors. He described the tendency of scammers to lure investors with high promises.

“As fraudsters exploit the popularity of crypto-assets to promise astronomical profits, we urge investors to continue to exercise extreme caution in this space,” Tenrero said.

The complaint showed SafeMoon's value skyrocketed by 55,000% between March 12 and April 20, 2021, ultimately garnering a market cap of more than $5.7 billion. The narrative turned dark on April 20 when it was revealed that the liquid pool was unreliable. As far as the public is concerned, the sale price has been destroyed by 50%.

Interestingly, recent SEC charges have caused SafeMoon's market value to halve in the past few hours.

In the midst of the financial storm, they say, Caroni engaged in a wash trade to simulate market activity. In fact, the suit accused Nagy, Caroni and Smith of violating the registration and anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.