Briefly
- DOJ prosecutors are transferring ahead with the Safemoon case, regardless of the broadly circulated "crypto memo" earlier this month.
- DOJ attorneys say continuing to trial stays in line with present coverage.
- Safemoon founders are charged with securities fraud, wire fraud, and cash laundering.
The Division of Justice instructed a federal decide it plans to proceed with a securities fraud case towards the founders of cryptocurrency Safemoon, regardless of an company memo circulated earlier this month instructing federal prosecutors to keep away from pursuing instances that will contain figuring out the securities standing of crypto belongings.
In a letter despatched Friday to the Brooklyn federal decide overseeing the case, DOJ attorneys mentioned they’d performed an “inside evaluation” of whether or not the division’s new crypto insurance policies would possibly implicate the Safemoon case, and concluded it ought to “proceed to trial on all counts.”
In early April, the DOJ shuttered its crypto-focused enforcement staff and instructed its attorneys to wind down prison crypto instances in a number of key areas. One such space: any instances that “would require the Justice Division to litigate whether or not a digital asset is a ‘safety’ or a ‘commodity.’”
In late 2023, federal prosecutors arrested Safemoon’s founders and charged them with securities fraud, wire fraud, and cash laundering. The indictment alleged that the founders instructed holders of their cryptocurrency, which trades as SFM, that the token’s liquidity was locked, when in actuality the defendants "fraudulently diverted and misappropriated thousands and thousands of {dollars}' price of purportedly ‘locked’ SFM liquidity for his or her private profit."
On Friday, the decide overseeing the Safemoon case, Eric Komitee, additionally denied the defendants’ movement to dismiss the case on the grounds that SFM just isn’t a safety. Komitee dominated this objection was untimely, and that it was not his function to weigh in on SFM’s safety standing.
“SFM’s standing as a safety (or not) ought to be left to the jury,” he wrote. “The Court docket mustn’t resolve that essentially factual dispute earlier than the events can develop the document at trial.”
Although the DOJ has mentioned that beneath its new digital belongings guidelines it is going to proceed to pursue fraud within the crypto sector, the cost of “securities fraud” within the Safemoon case—which it now’s formally nonetheless pursuing—seems poised to obligate federal prosecutors to show at trial that SFM is a sort of safety often called an funding contract.
Weeks after Safemoon’s founders had been arrested, the corporate filed for chapter. At its peak in early 2022, SFM briefly eclipsed a $1 billion market capitalization. At writing, it’s price barely greater than $13 million.
