Safemoon CEO On The Brink Of Losing Legal Representation Due To Lack of Funds |

John Karony, CEO of the bankrupt crypto firm SafeMoon, has experienced a setback in his legal defense following his attorneys’ decision to withdraw from the case. Karony is currently facing criminal charges for conspiracy to commit wire fraud, money laundering, and securities fraud in the US.

Karony’s Lawyers File Motion To Withdraw

Petrillo Klein & Boxer, Karony’s lawyers, have filed another motion to withdraw as counsel to the defendant due to “his lack of funds to pay for private counsel.” The lawyers had previously filed a motion dated January 22, 2024, where they made the same request due to their client’s lack of funds to pay for their services. 

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In their most recent filing, the lawyers highlighted that Karony had gotten another counsel through the Criminal Justice Act. Judge Eric Komitee had, in his response to Petrillo Klein & Boxer’s initial motion, mentioned that non-payment of legal fees wasn’t a sufficient basis to permit an attorney’s withdrawal from representation. 

However, he added that the court would consider and “likely grant” the motion if Karony’s lawyers could get the defendant another counsel. Judge Komitee had specifically ordered the lawyers to help Karony apply for counsel through the Criminal Justice Act if he could not pay for his defense. 

What Led Up To Karony’s Inability To Pay Legal Fees

In their initial motion, Petrillo Klein & Boxer mentioned that SafeMoon had agreed to indemnify its CEO for legal fees owed to the firm. However, the crypto firm failed to deliver on its promises and subsequently filed for bankruptcy

The lawyers also revealed that they had received a limited retainer fee, which was paid on behalf of Karony, but the amount has been exhausted by legal fees to date.

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Additionally, the government had seized proceeds from the sales of Karony’s house in Utah, making it harder for the SafeMoon CEO to pay legal fees to the firm. As such, seeing that their client had no means to pay, Petrillo Klein & Boxer noted that they “had no choice but to withdraw its representation of Karony.” 

SFM’s price trends to the downside on the daily chart. Source: SFMSDT on Tradingview

Karony’s Lawyers Secure His Bail

In what might be their last deed as Karony’s lawyers, Petrillo Klein & Boxer were able to secure Karony’s bail. According to a Law360 report, the SafeMoon CEO was released on a $3 million bond on February 9 and ordered to live at his parent’s home in Utah. 

The bail conditions include cyber and electronic monitoring and a ban on Karony’s crypto promotional activities. 

Prosecutors had initially blocked Karony’s release last year when they got a New York District Judge to stay the defendant’s bail release order. Then, they argued that Karony posed a flight risk and had substantial financial means to jump bail. They also added that his release posed a “continued danger to the community.”

However, this time, prosecutors are reported to have been content with the bail conditions that Magistrate Judge Taryn Merkl had set for the defendant. 

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Cover image from Dall-E, chart from Tradingview

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Author: Scott Matherson

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