CEO of bankrupt crypto project SafeMoon Braden John Karony is released on bail, but his legal team no longer wants to represent him.

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

Karony’s lawyers at Petrillo Klein & Boxer sought to withdraw from representing Karony on Feb. 12 due to an apparent lack of funds. They also mentioned the appointment of a public defender, Nicholas Smith, and Karony’s ongoing communication with him.

MOTION to Withdraw as Attorney by Petrillo Klein and Boxer LLP. by Braden John Karony. (Schuman, Adam) (Entered: 02/12/2024) pic.twitter.com/EKEsljwq9y

— Live4offrd #AllForOne (@live4offrd) February 12, 2024

“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,” Adam Schulman, partner at Petrillo Klein, wrote.

SafeMoon Failed to Pay Legal Fees, Lawyers Allege

Schuman’s latest filing reflects a previous submission from Jan. 22, wherein the law firm initially sought to withdraw as Karony’s counsel.

In it, he mentioned that SafeMoon initially promised to cover his legal fees owed to the firm. But, the firm later failed to provide funds for the retainer and subsequently filed for bankruptcy.

Karony made a partial payment to the firm for legal services, but it had been used up, the filing alleged. 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

In a Feb. 9 hearing, Karony was granted bail set at a $3m bond. He 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.” Instead, they caused significant market losses, resulting in over $200m in project funds being misused for personal gain.

Meanwhile, CTO Smith remains in custody. On Feb. 9th, his legal team requested permission for him to travel to Los Angeles and Henderson in February and March for work-related events.

The project faces additional setbacks. On Monday, an unidentified individual siphoned over $11m in liquidity from multiple pools linked to SafeMoon. This transaction sparked immediate speculation regarding a potential link to SafeMoon’s ongoing bankruptcy proceedings.

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