The U.S. SEC Charged Against SafeMoon CEO and Executives
SafeMoon seems to have landed on the moon safely, but it ended up somewhere else. The price of this crypto rallied and gave the impression that it would never come back. The U. S. Securities and Exchange Commission brought charges against the crypto project SafeMoon CEO John Karony, chief technology officer Thomas Smith, and Kyle Nagy for defrauding investors.
They withdrew almost $200 million worth of crypto assets and misappropriated the funds. They spend the funds living a lavish lifestyle like buying a custom Porsche sports car, real estate, and so on. The Justice Department charged SafeMoon CEO and executives with conspiracy to commit wire fraud, securities fraud, and money laundering conspiracy.
Safemoon promised to take the token price safely to the moon issuing the SFM on the Binance Smart Chain (BSC) in 2021. There is a function on the SFM smart contract that puts a 10% tax on every SFM token transaction. And it is supposed to be locked in liquidity pools. The thing is, founders have access to these tokens and they traded this token to use it for their benefit.
They lied to the investors and claimed not to do anything like that. Looks like they thought it was safe for them to do anything with the tokens and make a lot of money. SafeMoon was exploited and lost $8.9 million in BNB. It is interesting how it happened.
The hackers exploited the vulnerability of the SafeMoon smart contract which has a Bridge Burn feature that lets anyone call the burn function on the SFM token to any address. The hackers took advantage of this vulnerability to transfer other users' tokens to the developer's address and that pumped the price of the SFM tokens.
Then the attackers swapped the SFM tokens to get BNB and ended up having 27,380 BNB tokens. According to Match Systems, the SafeMoon smart contract did not have this vulnerability in the previous version. This vulnerability came with an update and on the same day of this update, the attackers exploited SafeMoon. Does it sound like an inside job?
SafeMoon turned into a pump-and-dump scheme. And it is better to stay away from any crypto project like this.
