Crypto News

SafeMoon CTO Thomas Smith Pleads Guilty in $200M Crypto Fraud Scheme: A Deep Dive into the Fallout

February 22, 2025
Smart Money

SafeMoon CTO Pleads Guilty to Charges in Multi-Million Dollar Crypto Fraud Scheme

Brooklyn, NY – Thomas Smith, the Chief Technology Officer of SafeMoon LLC, has entered a guilty plea to multiple charges related to a significant cryptocurrency fraud scheme that allegedly defrauded investors of approximately $200 million. The plea was made during a court appearance on February 20, where Smith changed his previous not-guilty plea to guilty before Magistrate Judge Cheryl Pollak.

Court Proceedings and Charges

During the court session at a federal court in Brooklyn, Smith pleaded guilty to two critical charges: securities fraud conspiracy and wire fraud conspiracy. As part of the legal process, Judge Pollak has recommended that U.S. District Judge Eric Komitee, who is overseeing the case, accepts Smith’s new plea.

The implications of these charges are severe. The wire fraud conspiracy charge carries a maximum penalty of 20 years in prison, while the securities fraud conspiracy charge could result in up to 25 years of incarceration if Smith is sentenced to the maximum extent.

Background of the Case

The legal troubles for Smith and other SafeMoon executives began last November when the U.S. Department of Justice and the Securities and Exchange Commission (SEC) filed charges against Smith, SafeMoon CEO Braden John Karony, and creator Kyle Nagy. The officials accused the trio of orchestrating a scheme involving the SafeMoon token (SFM), promoting it with false claims about the locking of the token’s liquidity, which they allegedly had access to all along.

The SEC and prosecutors claimed that Smith, Karony, and Nagy misappropriated funds raised from investors, using more than $200 million for personal purchases, including luxury vehicles and real estate.

At its peak, SafeMoon reportedly reached a market capitalization estimated between $5.7 billion and $8 billion. However, the value subsequently plummeted nearly 50% on April 20, 2021, when it was publicly revealed that the token’s liquidity pool was not secured as claimed.

Arrests and Status of Co-Defendants

Smith and Karony were arrested in relation to these charges at the time the allegations were made public. In contrast, Nagy is currently on the run but is reported to have resurfaced in Russia. While Smith has now pled guilty, Karony maintains his innocence, having pleaded not guilty and previously sought to dismiss the charges. Earlier this month, he requested a delay in his upcoming criminal trial, citing potential changes in U.S. crypto policy due to President Trump’s proposed regulations, but Judge Komitee rejected this motion and set the date for the trial’s opening statements for April 7. The developments in this case underscore the increasing scrutiny that cryptocurrency projects face from regulatory bodies amid allegations of fraud and misconduct. As the case progresses, it will be closely monitored for its implications on the future of cryptocurrency regulation.