SafeMoon’s CEO secures bail, yet his legal representation seeks to withdraw from the case.

Braden John Karony, the CEO of the troubled cryptocurrency project SafeMoon, has been released on bail, but his legal team has decided to no longer represent him.

In November 2023, Karony and SafeMoon’s Chief Technology Officer, Thomas Smith, were arrested on charges of securities fraud, money laundering, and conspiracy to commit wire fraud. However, Kyle Nagy, the creator of the project, remains at large.

Karony’s lawyers at Petrillo Klein & Boxer filed a request to withdraw from representing him on February 12, citing a lack of funds. They also mentioned the appointment of a public defender, Nicholas Smith, and Karony’s ongoing communication with him. Adam Schulman, a partner at Petrillo Klein, stated, “Mr. Smith attended the bail hearing before Judge Merkl on February 9, 2024, at which time the firm represented Mr. Karony, and the court released Mr. Karony based upon an extensive set of pretrial conditions.”

SafeMoon Failed to Pay Legal Fees, Lawyers Allege
Schuman’s recent filing echoes a previous submission from January 22, wherein the law firm initially sought to withdraw as Karony’s counsel. In it, he mentioned that SafeMoon had initially promised to cover his legal fees owed to the firm. However, the firm failed to provide funds for the retainer and subsequently filed for bankruptcy. Although Karony made a partial payment to the firm for legal services, it had been used up, according to the filing. The lawyers further claimed that the government seized proceeds from the sale of Karony’s Utah home, which would have been used to cover legal fees.

Legal Wrangling
During a hearing on February 9, Karony was granted bail set at a $3 million bond and was allowed to stay at his parents’ home in Utah. However, this came with conditions, including cyber monitoring and a prohibition on engaging in crypto promotional activities. Federal prosecutors had previously objected to his bail, arguing that he posed a danger to the community and was at risk of fleeing.

Liquidity Drain Compounds SafeMoon’s Woes
In November, the SEC accused SafeMoon and its top executives of orchestrating a fraudulent unregistered offering of crypto securities. They allegedly promised to boost the token’s price “safely to the moon” but instead caused significant market losses, resulting in over $200 million in project funds being misused for personal gain. Meanwhile, CTO Smith remains in custody. On February 9, his legal team requested permission for him to travel to Los Angeles and Henderson in February and March for work-related events. Additionally, the project faces additional setbacks as an unidentified individual siphoned over $11 million in liquidity from multiple pools linked to SafeMoon, sparking immediate speculation regarding a potential link to SafeMoon’s ongoing bankruptcy proceedings.

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