US Prosecutors Disregard DOJ Memo, Continue SafeMoon CEO Trial
Federal prosecutors have decided to push ahead with the criminal case against former SafeMoon CEO Braden Karony in defiance of a Justice Department memo that indicates an easing off crypto enforcement.
In an April 18 court filing, US Attorney John Durham of the Eastern District of New York confirmed his office will continue with the prosecution, despite an April 7 memo by Deputy Attorney General Todd Blanche indicating a shift away from prosecuting digital asset cases.
DOJ Memo Signals Shift Under Trump
The Trump administration’s April 7 DOJ memo dissuades “regulation by prosecution” in crypto, which is to say SafeMoon and other digital currencies may no longer be considered securities. The memo is one part of the broader rollback of enforcement at the SEC as well.
The Blanche memo comes amid speculation that the Trump administration has been considering canceling the status of some digital assets and shifting the legal premises on which past enforcement actions were based.
Karony Legal Defense Refers to Policy Change
Karony’s lawyers have contended that the case be delayed pending possible changes in treating digital assets during Trump. They warned that the trial may commence at the same time the DOJ redefines tokens like SafeMoon’s status.
[T]he parties can learn. DOJ no longer considers digital assets like SafeMoon to be ‘securities,’\” lawyers for Karony said in a February filing.
The judge did deny the request for delay and instructed jury selection on May 5.
SEC Abandons Important Crypto Cases, Adds Regulatory Task Force
Since acting SEC Chair Mark Uyeda, who was appointed by Trump, took office, the commission has dismissed high-profile cases against Ripple, Coinbase, and Kraken. It has also established a crypto task force led by Commissioner Hester Peirce and declared memecoins aren’t securities.
This shift is a drastic departure from the vigorous enforcement approach of former Chair Gary Gensler.
Uncertainty Hangs Over DOJ’s Next Steps
Although Karony remains out on a $3 million bond and has pleaded not guilty, whether Trump’s DOJ will act to halt the case, as it did in unconnected proceedings against NYC Mayor Eric Adams, remains to be seen.
A veteran SEC official, John Reed Stark, raised the alarm in a New York Times op-ed: “By directing the SEC to abandon its essential mission of protecting investors, Mr. Trump is unnecessarily jeopardizing our financial system.”
Meanwhile, Karony’s trial goes on—despite policy headwinds emanating from Washington.
