Looking at the SEC press release, it appears HEX founder Richard Heart has been charged for the following offenses:
conducting unregistered offerings of crypto asset securities that raised more than $1 billion in crypto assets from investors
fraud for misappropriating at least $12 million of offering proceeds to purchase luxury goods
Further, the SEC press release states:
[Richard Heart] then defrauded those investors by spending some of their crypto assets on exorbitant luxury goods.
So what is Safemoon on the hook for? I'm sure you're aware it's widely known as a scam, but why? Is Safemoon likely to receive SEC charges and will they be found to have committed criminal offenses?
"conducting unregistered offerings of crypto asset securities that raised more than $1 billion in crypto assets from investors"
This first one is tricky for Safemoon, on March 1st 2021 1 Quadrillion Safemoon tokens were minted by Kyle Nagy & sent to a pre-sale contract.
The pre-sale was held before the token mint and raised between 60-70 BNB, worth $18,000, which was then added to a liquidity pool automatically.
SAFEMOON DID NOT RAISE ANY FUNDS FOR THEIR OWN DEVELOPMENT.
And that is crucially important, because while this indemnifies them against charges of offering unregistered securities in this particular manner, it does create a sticky problem in that Safemoon actually had no funds to develop anything once Kyle Nagy realised that the token was picking up interest and wouldn't be worth pump-and-dumping.
So how did Kyle get funds?
Simple, he exploited access to the liquidity pool on PancakeSwap.
Between March 05 2021 and April 05 2021, Kyle removed $561k from the Liquidity Pools.
But this is nothing yet, and the jaws of the SEC can snap around the following...
On April 1st, John Karony & Thomas Smith took over control of Safemoon using a second token deployer address - they have all permissions on the contract, can add/remove liquidity, etc.
On April 21st 2021, John & Thomas lock the liquidity pool tokens, claiming they have locked $250,000,000+ of investor funds away. See my tweet here for proof of these statements.
Between May 12 2021 and August 30th, $141.5 MILLION was removed from the Safemoon liquidity pool.
And this is the kicker, because we know that CEO John Karony bought himself:
- A $5m stake in his Mother's company
- A $2.25m mansion
- An Audi R8 in the US, and another in the UK
- A Tesla Plaid
- $300k worth of BSC Shitcoins which are now worth $0
- Designer clothing, Rolex
- Numerous flights around the world to luxury events like Monaco / Ferrari Racing
So there it is, I believe that Safemoon is likely to receive SEC charges because they intentionally defrauded investors in order to steal millions of dollars from the liquidity pools and spend significant sums on their own luxury purchases.
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