The CEO of bankrupt crypto firm SafeMoon, Braden John Karony, has been released on bail but could be left in the hands of a public defender due to a “lack of funds to pay for private counsel.”

John Karony has been embroiled in an alleged “multimillion-dollar international fraud scheme,” with the Justice Department charging Karony and his colleagues with securities, wire fraud and money laundering conspiracy in November.

However, his lawyers — Petrillo Klein + Boxer — have been looking to withdraw as John Karony’s counsel as early as Jan. 22, citing the SafeMoon CEO has an “apparent lack of funds” to pay for private counsel.

In a Feb. 12 filing, Petrillo partner Adam Schuman reiterated their earlier Jan. 22 motion to withdraw as counsel, explaining that SafeMoon once indicated it would compensate Karony’s legal fees but ultimately failed to deliver funds for the firm’s retainer and filed for bankruptcy.

Schuman also noted that a magistrate judge has now appointed a public defender to Karony as of Feb. 9, with the two “now in direct communication.”

Judge Komitee had ordered on Jan. 31 that Karony’s lawyers help him apply for a Criminal Justice Act lawyer — which gives counsel to defendants who can’t afford one — and he would “consider — and likely grant” their application after, even though not paying legal fees is not usually basis enough to withdraw.

Karony finally gets bail

Only days earlier, during a Feb. 9 hearing in New York, Magistrate Judge Taryn Merkl granted Karony bail and released him on a $3 million bond to detention at his parent’s Utah home, who signed on as his custodians, along with cyber and electronic monitoring and a ban on crypto promotional activities, according to a Law360 report.

Merkl reportedly denied Karony’s initially proposed $1 million bond, saying it was “totally insufficient,” and cited his reported access to millions worth of crypto.

However, Karony’s formerly CIA-employed parents reportedly swayed Merkl to release their son. The pair said they supported Karony despite his mother, Jennifer Karony, saying she reported him to the FBI and they had fallen out due to a legal fight over a business dispute.

Prosecutors had rebuked the initial bail conditions, saying Karony’s past legal biff with his parents could mean he won’t care about leaving them “on the hook”— which Karony’s lawyers rebuffed, claiming the conflict was resolved.

They also claimed his ties to the United Kingdom, where Karony lived for two years and where his finance still resides, along with his access to millions worth of crypto, means he’s a flight risk.

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Merkl and prosecutors were eventually content with the new bail conditions, with the judge reportedly telling Karony he was “extremely lucky.”

“You will be back here in a heartbeat if something goes wrong, and I promise you: You won’t get bail again.”

United States prosecutors arrested and charged Karony and chief technology officer Thomas Smith on Oct. 31, 2023, with securities, wire fraud and money laundering conspiracy. SafeMoon creator Kyle Nagy was also charged but remains at large.

The Securities and Exchange Commission has also charged Karony, SafeMoon creator Nagy and tech chief Smith with fraud and unregistered securities sales.

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