Thomas Smith, the Chief Technology Officer (CTO) of SafeMoon, has pleaded guilty to multiple fraud charges in connection to a $200 million cryptocurrency scheme that deceived investors.
During a hearing in Brooklyn Federal Court, Smith admitted to securities fraud conspiracy and wire fraud conspiracy, which carry a combined maximum sentence of 45 years—25 years for securities fraud and 20 years for wire fraud.
These charges were initially filed in November 2023 by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) alongside charges against SafeMoon CEO Braden John Karony and founder Kyle Nagy.
Authorities allege that the trio engaged in a coordinated effort to mislead investors about the security of their funds while secretly diverting millions for personal gain.
SafeMoon Executives Lied About Locked Liquidity, Causing Market Collapse
Prosecutors revealed that Smith, Karony, and Nagy misrepresented the security of SafeMoon’s liquidity pool, falsely claiming that investor funds were locked and inaccessible.
The illusion of security attracted thousands of investors, driving SafeMoon’s market capitalization to heights between $5.7 billion and $8 billion.
However, on April 20, 2021, the truth emerged—SafeMoon’s liquidity pool was not locked, and the executives had retained full access to the funds.
The revelation caused a sharp market collapse, wiping out nearly half of SafeMoon’s value and leaving investors with worthless tokens.
The SEC argues that this case highlights the dangers of deceptive practices in the cryptocurrency industry, where manipulated perceptions can lead to massive financial losses for retail investors.
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$200 Million Diverted for Luxury Cars and Real Estate
Investigations further revealed that Smith and his co-conspirators misappropriated over $200 million in investor funds for personal enrichment.
Instead of using the funds for SafeMoon’s development, prosecutors claim they were spent on luxury cars, extravagant real estate, and other high-end purchases.
The case exemplifies growing concerns over fraudulent schemes within the crypto sector, where bad actors exploit regulatory loopholes to mislead investors.
The DOJ and SEC have reinforced their commitment to protecting investors and cracking down on financial misconduct, citing the SafeMoon fraud as one of the most blatant cases of deception in the industry’s history.
A Landmark Case in Crypto Fraud Crackdowns
Smith’s conviction represents a pivotal moment in the ongoing regulatory crackdown on cryptocurrency fraud.
His guilty plea could set a precedent for stricter enforcement actions against fraudulent crypto projects.
Meanwhile, his co-defendants, Karony and Nagy, still face trial as authorities continue to build their case against them.
The SafeMoon scandal is part of a broader wave of legal actions targeting misconduct in the crypto industry.
Other high-profile cases include a shareholder lawsuit against Coinbase over bankruptcy risks, the SEC’s fraud lawsuit against Geosyn Crypto Mining, and Celsius’ appeal over its denied $444 million claim in the FTX case.Â
Additionally, South Korean blockchain firm WeMade is facing an $11 million lawsuit from employees over unpaid crypto bonuses.Â
These cases underscore the increasing scrutiny facing the cryptocurrency sector as regulators seek to enforce transparency, accountability, and investor protection.
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