A Florida man wanted over a $200 million fraud case linked to his Utah-based cryptocurrency company, SafeMoon LLC, is reported to have fled to Russia, where he was allegedly scammed by agents of the country's Federal Security Service (FSB).
Kyle Nagy escaped to Russia after he was charged in 2023 by the Securities and Exchange Commission for "perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon." The allegation that Nagy was scammed by the FSB was shared on Tuesday by VChK-OGPU, a Russian outlet on Telegram that purports to have inside information from Russian security forces.
Newsweek contacted the FBI's Miami Field Office and the VGX Foundation—which has since acquired SafeMoon—for comment via Facebook message and LinkedIn, on Tuesday.
Why It Matters
Nagy's whereabouts were previously unknown, and he hadn't been sentenced in the case. In November 2023, The Salt Lake Tribune reported that he had "possibly fled the country." Nagy, a U.S. citizen and resident of Florida, is wanted by the FBI.
What To Know
Nagy was charged by the SEC on November 1, 2023, alongside SafeMoon CEO John Karony and Chief Technology Officer Thomas Smith for "perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon," that was issued by their cryptocurrency firm, SafeMoon LLC.
The individuals are accused of misappropriating crypto assets from investors worth more than $200 million for their personal use, including purchasing luxury homes and cars, the SEC said.
The company's top executives were charged in New York District Court in November 2023 with criminal securities fraud conspiracy and wire fraud conspiracy, The Salt Lake Tribune reported.
According to VChK-OGPU, since April 2024, Russian citizens Zaur Alibekov and Evgeny Tsarev blackmailed Nagy and threatened him into giving them about $4.5 million. The channel described the funds as "payment for his peaceful stay in the Russian Federation."
VChK-OGPU alleged that Alibekov and Tsarev are "agents of the Russian FSB."
What People Are Saying
The U.S. Securities and Exchange Commission on November 1, 2023: "Today we charged SafeMoon LLC, its creator Kyle Nagy, SafeMoon US LLC, and the companies' CEO, John Karony, and Chief Technology Officer, Thomas Smith, for perpetrating a massive fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon."
David Hirsch, then-head of the SEC's Crypto Assets and Cyber Unit on November 1, 2023: "Decentralized finance claims to deliver transparency and predictable outcomes, but unregistered offerings lack the disclosures and accountability that the law demands, and they attract fraudsters like Kyle Nagy, who use the vulnerabilities to enrich themselves at the expense of others."
What Happens Next
The U.S. Department of Justice said in November 2023 that Nagy "remains at large."
Cryptocurrency fraud is likely to remain a common type of investment scam in 2025. Last year, the Federal Trade Commission said $679 million was lost to cryptocurrency fraud in the first half of 2024.
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