Asian Tech Press (Nov 2) -- The U.S. Securities and Exchange Commission (SEC) filed charges against the controversial cryptocurrency project SafeMoon and related individuals on Wednesday.

The SEC alleged that the company and its executive team perpetrated a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon.

The SEC named two companies, SafeMoon LLC and SafeMoon US LLC, as well as founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith.

Nagy allegedly told users that if their funds were held in SafeMoon's liquidity pool, they would be safely locked and could not be withdrawn by anyone.

However, the SEC said that in fact, "large portions of the liquidity pool were never locked."

SafeMoon and its executive team later withdrew more than $200 million in cryptocurrency from the program and wiped out billions of dollars in cryptocurrency market value, the SEC said.

The defendants allegedly misappropriated investor funds for their personal use, such as purchasing McClaren cars, extravagant travel and luxury homes.

The SEC alleged that Karony and Smith used the misappropriated assets to prop up SafeMoon's prices and manipulate the market, including by wash trading.

The U.S. Attorney's Office for the Eastern District of New York has filed a a parallel criminal action against the three SafeMoon executives.

The office charged Smith, Karony, and Nagy with securities fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.

The three allegedly lied about whether SafeMoon's liquidity pool were locked up and misappropriated millions of dollars.