In response to the indictment, Karony filed a motion in April to have the charges dismissed, with Smith joining the motion in September. The letter filed Friday argues that if the government is involved in communications like the Reddit post, it could improperly influence the testimony of alleged SafeMoon victims, potentially infringing on Karony’s due process rights.
The letter notes, “If directed by the government, communications like the Reddit post improperly taint the testimony of alleged SafeMoon victims in this case — particularly if they continue unabated.”
In October, federal prosecutors from the Eastern District of New York maintained that Karony and Smith should not be allowed to dismiss the securities fraud and wire fraud charges by claiming their actions lacked necessary domestic ties. Brooklyn prosecutors argue that even though the alleged scheme occurred on a decentralized blockchain, the executives were U.S. citizens and residents when they operated the fraud through SafeMoon, a U.S.-based limited liability company. Furthermore, they argue the pair targeted investors in the U.S., including in New York’s Eastern District, with misleading statements.
