Seemingly buried with the memecoin wave of the decade, Safemoon – one of the crypto coins that 'made waves' in 2021 – is becoming the center of a major legal battle in the U.S. Although the U.S. Department of Justice (DOJ) recently adjusted its prosecution policy regarding digital assets, federal prosecutors still decided to continue pursuing the criminal case against the founders of Safemoon.
What is Safemoon and why is it being sued?
#Safemoon used to be a heavily promoted token with promises of 'keeping liquidity safe' and the potential for rapid price increases thanks to a deflationary model. This token reached a market capitalization of over 1 billion USD in early 2022, but quickly plummeted and is now only around 13 million USD.
However, behind the colorful marketing facade, federal prosecutors allege that this project is a sophisticated financial scam.
Specifically, at the end of 2023, the DOJ arrested and criminally charged the founders of Safemoon with three main counts:
Securities fraud
Wire fraud
Money laundering
The allegations revolve around the founding team's claim that SFM's liquidity was locked to protect investors, while in reality, they quietly withdrew millions of USD from this liquidity fund for personal purposes.
DOJ changes policy, but Safemoon still doesn't escape?
At the beginning of April 2025, #DOJ unexpectedly announced a major change in the policy for handling cases related to cryptocurrency:
Dissolve the dedicated crypto team.
Request prosecutors to limit pursuing cases that must determine whether a digital asset is a 'security' or not.
This move is seen as reducing legal pressure on many crypto projects – which had previously been prosecuted based on labeling their tokens as unregistered securities.
However, in a surprising move, the U.S. Department of Justice this week sent an official letter to the federal court in Brooklyn, asserting that the Safemoon case is still 'eligible for trial,' despite the new policy.
According to them, this case focuses on clear financial fraud, and the determination of whether SFM is a security will be left to the jury's decision during the trial – rather than having the court dismiss the lawsuit early.
The court rejected the defendant's request to dismiss the case
The defendants in the Safemoon case had previously filed a motion to dismiss the entire indictment, arguing that SFM is not a security and therefore cannot be prosecuted under securities law.
However, Federal Judge Eric Komitee dismissed this request, stating that:
'Determining whether SFM is a security is a factual matter, and it cannot be hastily concluded when the parties have not presented sufficient evidence in court.'
This means that the trial will still take place and the core issue – whether SFM is an 'investment contract' according to legal definition – will be decided by the jury.
What will happen if the DOJ wins the case?
If the DOJ succeeds in proving that:
Safemoon is an unregistered security,
And the founders intentionally committed financial fraud with this asset,
... the consequences will be severe, not only for the defendants but also set a significant precedent for other crypto projects.
Memecoins that previously operated under a similar model to Safemoon may come under legal scrutiny.
Exchanges with a history of listing SFM (including their users) may face additional investigation.
The ability to raise funds and operate for new projects will face increased pressure to comply more strictly with securities regulations.
Contact with current crypto market users
The Safemoon case is a clear reminder that regardless of changes in the law, acts of financial fraud will not be overlooked. For users investing in new projects:
Do not trust 'liquidity lock' commitments without transparent evidence and clear audits.
Be cautious of tokens with price increases driven by FOMO, lacking real value or having no clear use case.
The fact that a project is listed on a major exchange (including Binance) does not mean that the project is absolutely safe.
Especially in the context of the RWA market and developing multi-chain assets, the Safemoon case will make investors and developers more cautious about legal factors – factors that can decide the survival of a project in the long term.
Conclusion
Safemoon was once a symbol of the FOMO wave and extreme speculation in the crypto market. Now, it is becoming another symbol: a painful lesson about blind faith and legal consequences.
The U.S. Department of Justice may be easing its policy on crypto, but that does not mean that fraudulent acts can escape the courts. The upcoming trial will not only be a showdown between the DOJ and the founders of Safemoon, but also an important legal test for the entire crypto space in the future.