"Ex-CTO Admits Role in $200M SafeMoon Fraud Scheme"

In a significant development in the ongoing SafeMoon fraud case, Thomas Smith, the former Chief Technology Officer (CTO) of the now-defunct cryptocurrency firm, has withdrawn his initial not-guilty plea and admitted to his role in a multimillion-dollar scheme that defrauded investors of over $200 million. Smith pleaded guilty to securities fraud conspiracy and wire fraud conspiracy in a recent court appearance before Magistrate Judge Cheryl Pollak in the Brooklyn federal court.

According to court filings, Smith admitted to misleading investors about the status of SafeMoon’s liquidity pool, falsely claiming it was locked and inaccessible. Prosecutors allege that Smith, along with CEO Braden John Karony and creator Kyle Nagy, diverted client funds for personal use, engaging in securities fraud and wire fraud. Smith’s guilty plea comes after the U.S. Securities and Exchange Commission (SEC) and the Justice Department charged SafeMoon executives in November 2023 for conspiracy, fraud, and money laundering tied to the deceptive promotion and handling of the SafeMoon token (SFM).

The SEC alleged that the team falsely marketed SFM as a secure investment, claiming that its liquidity pool was locked and inaccessible to the project’s insiders. In reality, prosecutors claim the executives retained full access and siphoned off more than $200 million in investor funds, using them for personal gain, including luxury cars, expensive real estate, and other high-end purchases. The trio was also accused of engaging in wash trading, a deceptive tactic where the same asset is bought and sold simultaneously to create misleading market activity, inflating the token’s market cap to as high as $8 billion at its peak before crashing.

Smith and Karony were arrested shortly after the charges were filed, while Nagy remains at large. Karony has pleaded not guilty to all charges and previously attempted to have them dismissed. His request for a trial delay was recently denied, and opening statements are set to begin on April 7. If accepted, Smith faces a maximum sentence of 20 years for wire fraud conspiracy and up to 25 years for securities fraud conspiracy. The sentencing decision now rests with U.S. District Judge Eric Komitee, who will weigh the severity of the offenses and Smith’s cooperation in the ongoing investigation.