In a significant development for victims of SafeMoon, the U.S. Federal Bureau of Investigation (FBI) has begun soliciting information from investors who say they were defrauded. This follows the May conviction of SafeMoon’s CEO, Braden John Karony, on multiple charges, including securities fraud, wire fraud, and money laundering.
Prosecutors proved that Karony and co-founders diverted more than $200 million from SafeMoon’s liquidity pools. This, even though they publicly claimed those funds were locked and untouchable. To facilitate restitution, the FBI has opened a victim questionnaire, asking people who lost money in SafeMoon to submit their details.
Restitution efforts begin
The information submitted will be used to establish who qualifies as a victim of federal crimes. This information will also help with distributing compensation or other services. The agency has advised that responses will be kept confidential.
Experts caution, however, that obtaining restitution in such decentralized finance (DeFi) cases is challenging. Among the obstacles are wide variations in when and at what price victims bought in, volatile token values, and incomplete record-keeping among investors.
Moreover, tracing misused or stolen funds through DeFi ecosystems is difficult because of their pseudonymous, dispersed nature. Even if funds are seized, distributing them fairly among thousands of small investors poses legal and logistical hurdles.
Case background
The case pertains to approximately March 2021 and June 2022, when Karony and his co-conspirators agreed to lie to SafeMoon V1 investors about whether SafeMoon executives could access SafeMoon’s liquidity pool. As SafeMoon’s market capitalization grew, Karony and his co-conspirators fraudulently diverted and misappropriated millions of dollars’ worth of liquidity from the SafeMoon liquidity pool for their personal benefit, the FBI claimed. In February 2025, Smith pleaded guilty to conspiring to commit securities fraud and wire fraud.
Observers hope the case will push for better transparency, robust tokenomics, and smarter design practices in DeFi going forward.