In a major development, the United States Securities and Exchange Commission (SEC) has charged cryptocurrency project SafeMoon and three of its executives with fraud and unregistered securities sales. The charges, which were announced on November 1, accuse the executives of misappropriating $200 million in investor funds to finance a lavish lifestyle.

According to the SEC, SafeMoon creator Kyle Nagy, CEO John Karony, and chief technology officer Thomas Smith allegedly withdrew assets worth $200 million from the project and improperly used investor funds. The executives now face charges of conspiracy to commit securities fraud, conspiracy to commit wire fraud, and money laundering conspiracy, as filed by the Justice Department.

While Karony and Smith have been apprehended, Nagy remains at large and is being pursued by authorities. The SEC alleges that SafeMoon marketed its token by promising that funds would be locked in a liquidity pool, making them inaccessible to anyone, including the defendants. However, investigations revealed that a significant portion of the pool was not actually locked.

The SEC further added, "As alleged, the defendants deliberately misled investors and diverted millions of dollars to fuel their greedy scheme and enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles, and real estate."

SafeMoon, known as a "TikTok meme coin," experienced a meteoric rise in value between March 12 and April 20, 2021, skyrocketing by a staggering 55,000%. At its peak, the cryptocurrency reached a market capitalization of over $5 billion before encountering vulnerabilities in its smart contract code. The Justice Department claims that the market cap even rose to $8 billion.

According to the SEC, Karony and Smith have been accused of misappropriating funds to artificially inflate the price of SAFEMOON through purchases. Additionally, Karony has also been implicated in wash trading.

The charges against SafeMoon and its executives highlight the increased scrutiny being placed on the cryptocurrency industry to ensure investor protection and prevent fraudulent activities. As these legal proceedings progress, the fate of SafeMoon and its implicated executives remains uncertain, while investor confidence in the cryptocurrency market may experience volatility.