Safemoon CEO’s legal team seeks exit amid financial turmoil

The legal landscape for Braden John Karony, CEO of the now-defunct cryptocurrency firm SafeMoon, has taken a significant turn as his legal representation, Petrillo Klein & Boxer, filed a motion to withdraw from the case. 

Following the allegations made against Karony in November 2023, which include charges of securities fraud, wire fraud, and conspiracy to commit money laundering alongside Thomas Smith, SafeMoon’s CTO, there has been a significant shift in Karony’s legal representation. Adam Schuman of Petrillo Klein & Boxer, in a filing on Feb. 12, outlined their decision to withdraw from representing Karony.

This decision was influenced by SafeMoon’s inability to fulfill its promise to cover Karony’s legal fees, leading to a shortfall in the necessary funds for the firm’s retainer as SafeMoon filed for bankruptcy. Consequently, this financial shortfall has resulted in the appointment of a public defender for Karony, marking a pivotal change in his defense strategy.

Karony’s bail hearing on Feb. 9 concluded with his release on a $3 million bond. The conditions set for his bail are notably stringent, encompassing house arrest at his parent’s residence in Utah. Additionally, these terms include both cyber and electronic monitoring to ensure compliance.

The huge bail amount was a response to concerns over Karony’s potential flight risk, given his substantial cryptocurrency assets and previous residency in the United Kingdom. Magistrate Judge Taryn Merkl emphasized the gravity of these conditions, reflecting the serious nature of the allegations.

The involvement of Karony’s parents in securing his bail, despite past legal disputes and significant family tension, underlines the complex personal dynamics at play. Notably, Karony’s mother had previously reported him to the Federal Bureau of Investigation, illustrating the depth of the family’s legal entanglements and their impact on the case.

Furthermore, as part of the bail conditions, Karony faces a strict prohibition on engaging in any cryptocurrency promotional activities. This measure is a bid to mitigate any potential risks associated with his involvement in the cryptocurrency sector while the legal proceedings are ongoing.

Federal prosecutors initially opposed the bail conditions, arguing that Karony’s past legal issues with his parents and his significant ties outside the United States presented a tangible risk of him fleeing the jurisdiction. However, the court ultimately found the revised bail conditions sufficient to mitigate these concerns.

In parallel to the criminal charges, the Securities and Exchange Commission (SEC) has also accused Karony, Smith, and the project’s creator, Kyle Nagy (who remains at large), of conducting a fraudulent scheme. This scheme allegedly involved promises to investors that were not fulfilled, leading to the misuse of over $200 million in project funds.