SafeMoon Founder John Karony Receives 100-Month Federal Prison Sentence in Landmark Crypto Fraud Case

Justice finally catches up with SafeMoon's John Karony—eight years and four months in federal prison for orchestrating one of the most notorious token debacles in crypto history.

The sentence lands like a regulatory hammer, closing a chapter on a scheme that promised "reflections" but delivered little more than vaporized investor funds. Court documents detail how Karony and his team allegedly manipulated the token's liquidity while marketing it as a safe, revolutionary project.

Where Did the Money Go?

The prosecution's case painted a picture of classic misappropriation—funds earmarked for project development and locked liquidity reportedly funneled into personal luxuries and speculative trades. The promised 100% secure, auto-rewarding ecosystem? It apparently operated with a backdoor.

A Watershed Moment for Enforcement

This isn't just another crypto sentencing. The 100-month term signals a new, tougher stance from U.S. authorities on token-based fraud. It sets a precedent that flashy websites and influencer hype won't shield founders from the long arm of the law when the economics are pure fiction.

Investors left holding the bag watched the token's value follow the trajectory of a failed rocket launch—brief, spectacular, and ultimately headed for a crash. It's the old Wall Street playbook, just with a blockchain facade and a glossary of new terms to hide the same empty promises. The crypto space cleans up one bad actor, but the carnival of get-rich-quick schemes always seems to have a new tent ready to pitch.

Closer to theft than fraud 

Karony was convicted of his crimes in May 2025 following a jury trial that took place in the US District Court for the Eastern District of New York. The court found him guilty on three counts, including conspiracy to commit securities fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. 

According to court proceedings from today, February 10, 2026, Karony’s total offense level was 37, and he was put in criminal history category 1 with a guideline of 210 to 262 months.

The proceedings today involved victims sharing their experiences with SafeMoon and specifically Karony, whom several of them claimed had been the one to convince them the project was trustworthy and WOULD not rugpull. 

“We believed in Mr. Karony, what he said – it gave us a sense of false security. Our investment changed the trajectory of our life. We have not been able to buy a house. To this day, we have not been able,” one victim claimed. 

Karony’s defense defended his position by claiming that it all went down when Karony was just 25, and his brain was just developing. His defense tried to attract sympathy by diving into his family history, but that did little to help. He had already been convicted. 

After the court went on recess and resumed session, the Judge in charge, United States District Judge Eric R. Komitee of the Eastern District of New York, called what happened with SafeMoon a “massive fraud.” 

“I’d describe it this way: the defendant and co-conspirators went to great pains to earn the trust of people who bought it, assuring there would not be a rug-pull. That happened,” Komittee said. 

The judge also pointed out that the incident was more similar to “theft than fraud,” especially since it was not a small loss per person, as is the case in many securities frauds. 

“I sentence you to 100 months in the custody of the AG. On count 1, 60; count 2, 100 concurrently,” Komittee concluded. 

The hearing for the third count of money laundering will reportedly take place on April 23 at 10 in the morning. 

What happened to the SafeMoon project?  

According to SEC documents, Karony and his co-conspirators misrepresented various material aspects of the SafeMoon offering to investors. 

They lied that SafeMoon relied on “locked” liquidity pools that would automatically increase in size due to a 10% tax imposed on every SafeMoon transaction; that the “locked” SafeMoon liquidity pool meant the defendants and other insiders at SafeMoon would not be able to “rug pull” SafeMoon investors by removing liquidity from the SafeMoon liquidity pool. 

They also claimed that tokens in the liquidity pool would only be used for limited pre-defined business purposes, not personal enrichment; that the defendants would manually add token pairs to the SafeMoon liquidity pool when transactions of SafeMoon occurred on specific centralized exchanges; and that the developers were not and had not been holding and trading SafeMoon for their benefit.

In truth, Karony and his co-conspirators had access to the SafeMoon liquidity pools, which they used to intentionally divert and misappropriate millions of dollars’ worth of tokens for their personal benefit. 

Also, although they publicly denied that they personally held or traded SafeMoon, they repeatedly bought and sold SafeMoon, sometimes at the height of SafeMoon’s market price, earning themselves millions of dollars in profits. 

They masked their movement of the fraudulent proceeds via numerous private un-hosted crypto wallet addresses, complex transaction routing, and pseudonymous centralized exchange accounts. 

Other company executives are in trouble too

Karony reportedly walked away from the scheme with over $9 million in crypto assets, some of which he used to purchase luxury vehicles and real estate, including a $2.2 million home in Utah, additional homes in Utah and Kansas, a $277,000 Audi R8 sports car, another Audi R8, a Tesla, and custom Ford F-550 and Jeep Gladiator pickup trucks.

His co-conspirator, Thomas Smith, previously pleaded guilty and is awaiting sentencing, while his other co-conspirator, Kyle Nagy, remains at large.

“As proven at trial, the SafeMoon digital asset was anything but SAFE and turned out to be pie in the sky for investors who were deliberately misled by Karony, a man who sought to get rich quick by stealing and diverting millions of dollars,” stated United States Attorney Nocella. 

The maximum possible sentence for his crimes could have been up to 45 years. Prosecutors had reportedly recommended 12, while the defense pushed for about a year. 

The decision to settle on the 100-month term has taken into account federal sentencing guidelines, forfeiture orders, and some other factors like restitution considerations.

If you're reading this, you’re already ahead. Stay there with our newsletter.