The U.S. Securities and Exchange Commission (SEC) announced charges against cryptocurrency company SafeMoon, its creator Kyle Nagy and its U.S. counterpart SafeMoon US.

The executive team, which included CEO John Karony and Chief Technical Officer Thomas Smith, were accused of orchestrating a grand fraudulent scheme involving the unregistered sale of the crypto asset security, SafeMoon.

The SEC alleged SafeMoon's promoters made grandiose promises, assuring the token would soar "safely to the moon."

Contrary to these promises, they not only obliterated billions in market capitalization but also allegedly withdrew over $200 million in crypto assets from the project, channeling investor funds for personal luxuries.

David Hirsch, chief of the SEC Enforcement Division's Crypto Assets and Cyber Unit (CACU), expressed concern over the lack of transparency and accountability in decentralized finance.

He pointed out the vulnerabilities these spaces present, making them attractive to scammers such as Nagy who exploit them for personal gain.

The complaint further revealed Nagy had falsely assured investors that their funds were securely locked in SafeMoon's liquidity pool.

In stark contrast to these claims, vast sums from this pool were allegedly used by the defendants for lavish personal expenditures, including luxury cars, opulent homes and extravagant travels.

CACU Deputy Chief Jorge G. Tenreiro issued a stern warning to investors, urging them to tread carefully in the crypto domain, where fraudulent entities often promise sky-high returns only to deliver devastating losses.

The SEC disclosed SafeMoon's price had surged by an astonishing 55,000% between March and April 2021, achieving a market cap of over $5.7 billion.

The bubble burst when it was discovered SafeMoon's liquidity pool wasn't as secure as claimed, causing the price to nosedive nearly 50%.

Following this debacle, it's alleged Karony and Smith manipulated the market by making substantial purchases of SafeMoon to artificially inflate its price.

Karony was also accused of engaging in "wash trading," creating a false impression of market activity.

The charges, filed in the U.S. District Court for the Eastern District of New York, accused the defendants of violating multiple securities acts.