The latest development in the crypto world has once again brought the issue of investor security. John Karony, CEO of the popular crypto project called Safemoon, was officially found guilty of improving investor funds through fraud.

According to the court documents, Karony introduced the Safemoon project with “high earnings” and collected large amounts of money from investors. However, most of these funds were not spent on Karony’s personal lifestyle, not to the development of the project. Among the expenditures in the file, luxury vehicles, special flights, million dollars of real estates and special activity costs are remarkable.

Investors conveyed funds to the project, believing in the allegations that Safemoon would bring revolution to the decentralized finance (defi) world. However, as a result of the investigation, it was revealed that Safemoon did not have a significant technical infrastructure in the background, and that the project was largely working with the “Pump and Dump” model. In other words, after the token price has been inflated artificially, Karony and its immediate surroundings have made a profit by selling; The remaining investors remained at the loss.

The US Department of Justice (DOJ) and the Stock Exchange Commission (SEC) described this case as an exemplary “Rug Pull” fraud. In addition, John Karony was tried not only with fraud, but also for crimes of money laundering and misleading the investor and faced heavy penalties. Penalties are expected to be clarified, but there may be up to 30 years in prison.

The Safemoon case has once again proved how critical regulatory control is in crypto projects. Experts warn that investors should pay attention not only to marketing campaigns, but also to pay attention to concrete criteria such as transparency, open source code, team information and usage areas.

In order to prevent investor grievances, regulatory institutions have started to work on new instructions. Especially new measures such as inspection of influencer -supported token promotions and the necessity of “transparency declaration” are on the agenda.

As a result, the Safemoon scandal has once again revealed how sensitive the concept of trust is in the crypto world. In order to prevent similar events in the future, it is vital that investors make information -based decisions and increase regulatory inspections.