Defense attorneys in the criminal fraud trial of John Karony neared the end of their case on Tuesday. The former SafeMoon CEO is accused of misrepresenting SafeMoon to investors, including by secretly withdrawing funds from SafeMoon liquidity pools and using them for personal purchases, including cars and real estate.
The day ended with the news that Karony may testify in his own defense starting later today. That decision will be made tonight and may be shared publicly on the case docket.
His defense strategy remains focused on characterizing Karony’s use of funds from the SafeMoon liquidity pool as being in line with public statements.
The day’s most colorful witness, Nicholas Ranalli, a factory worker from Canada, testified to his awareness that the SafeMoon liquidity pool was not entirely “locked,” and that he felt its use for development and operating expenses was acceptable to him as an investor.
“I figured that would be obvious,” Ranalli said of the spending. “They deserve that money.”
Ranalli compared it to running a hot dog and hamburger restaurant. “If you want to get to steaks, you have to use the money you made from hamburgers and hot dogs.”
On cross-examination, Ranalli testified that he still holds SafeMoon tokens and is “hoping the price will go up,” suggesting motivation for his supportive testimony.
Read more: EXCLUSIVE: Ex-SafeMoon CTO admits rug pull, details insider exemptions
The defense also called Rutgers Professor Bruce Mizrach, who walked the jury through price data following events, including the “locking” of three tranches of SafeMoon liquidity.
Each lock followed a period of price declines and triggered a subsequent rally. Mizrach also tracked token price action throughout April 21, 2021, the day after an activist known as War on Rugs highlighted withdrawals from the SafeMoon liquidity pool.
That triggered a 50% drawdown in the SafeMoon token price, and Mizrach showed positive price reactions to statements by Karony the next day.
Broadly, the defense seemed to be hoping to show that Karony’s actions and statements benefited investors rather than harming them. However, prosecutors emphasized that the price dropped again, by more than 26%, on April 22.
