Source: Cointelegraph Original: "{title}"
Despite the U.S. Department of Justice issuing a memo suggesting the abandonment of the "prosecute to regulate" policy regarding digital assets, federal prosecutors have stated they will continue to pursue charges against former SafeMoon CEO Braden John Karony.
In documents submitted to the U.S. District Court for the Eastern District of New York on April 18, U.S. Attorney John Durham indicated that his office had reviewed the DOJ memo released by Deputy Attorney General Todd Blanche on April 7 and decided to proceed with the lawsuit against Karony.
The former SafeMoon CEO faces charges of conspiracy to commit securities fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering, accused of "transferring and misappropriating millions of dollars" worth of the platform's SFM tokens between 2021 and 2022.
Karony was initially charged in October 2023 during the tenure of then-U.S. Attorney Breon Peace for the Eastern District of New York. He suggested in February that the criminal trial should be postponed, implying that there could be "significant changes" in the enforcement of securities laws during President Trump's administration. The judge denied this motion and subsequently ordered jury selection to begin on May 5.
However, before the U.S. Securities and Exchange Commission (SEC) withdrew lawsuits and investigations against several cryptocurrency companies accused of violating securities laws, Karony's legal team had already raised concerns about potential "policy changes" under Trump's leadership. The memo released by Blanche on April 7 also indicated that the DOJ under Trump would instruct jurisdictions to no longer pursue multiple cryptocurrency enforcement cases.
Karony's legal team stated on February 5: "Parties may learn just days or hours before the trial begins that the DOJ no longer views digital assets like SafeMoon as 'securities' under securities law. Worse, parties may not learn this until during or shortly after the trial, while half of the charges are based on the government's classification of SafeMoon as a security."
Since Mark Uyeda was appointed as acting SEC chair by Trump in January, the agency has withdrawn lawsuits against companies like Ripple Labs, Coinbase, and Kraken. The SEC has also established a cryptocurrency working group led by Commissioner Hester Peirce to explore a regulatory framework for digital assets and released a memo stating that meme coins do not fall under securities.
The agency's actions indicate a more lenient approach to digital assets compared to the tenure of former chair Gary Gensler.
Former SEC official John Reed Stark and Duke University lecturer Lee Reiners stated in a commentary published in The New York Times on April 18: "By instructing the SEC to abandon its critical mission of protecting investors, Trump is unnecessarily jeopardizing our financial system. Whether he is fulfilling a commitment to cryptocurrency donors, eager to cash out (or possibly both), this development is concerning not only for investors and banks but for all of us."
It remains unclear whether officials appointed by Trump at the DOJ intend to intervene and halt Karony's case, as the DOJ did in the corruption case involving New York City Mayor Eric Adams. As of the time of publication, the former SafeMoon CEO is set to stand trial in May. He has been free on a $3 million bail since February 2024 and has pleaded not guilty to all charges.
Related: After changes in SEC leadership, U.S. courts suspend lawsuits in 18 states.
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