Two other employees of the crypto company were also charged, Kyle Nagy and Thomas Smith, with Smith being arrested in New Hampshire, according to a press release from the U.S. Attorney’s Office in Eastern New York. Karony was arrested in Provo on Wednesday.

Utah Business named Karony one of the magazine’s 2022 CEOs of the year in its March 2022 issue.

Court documents allege Karony, Nagy and Smith defrauded investors of a decentralized finance digital asset called “SafeMoon,” abbreviated SFM, that the company issued. In the alleged scheme, the defendants misled investors, saying their investments were locked into a liquidity pool that would grow with each SafeMoon transaction because of the 10% tax imposed.

The company later grew to be valued at $8 billion after it was first launched in March 2021 and the defendants allegedly “diverted and misappropriated” millions from the “locked” liquidity pool, the U.S. Attorney’s Office claims.

According to the press release, Karony and the others would use the diverted funds for their own personal gain, such as purchasing luxury cars and real estate. Investors were also promised that the tokens in the liquidity pool would not be used to enrich the defendants.

Charges were also filed against the company, Karony, Nagy and Smith by the U.S. Securities and Exchange Commission for the unregistered sale of the crypto asset security SafeMoon, according to a press release from the SEC.

In this case, instead of delivering profits promised to investors, the defendants allegedly “wiped out billions in market capitalization, withdrew crypto assets worth more than $200 million from the project, and misappropriated investor funds for personal use.”

According to the SEC, the price of SafeMoon went up 55,000% from March 2021 to April 2021, but the price plummeted 50% when it became public that the liquidity pool was not locked as the company had claimed.

Karony and Smith allegedly used “misappropriated assets” to make purchases of SafeMoon and artificially prop up the price.

According to the Utah Department of Commerce, SafeMoon has been registered in Pleasant Grove since 2021.