From Boom to Bust: SafeMoon CTO’s Guilty Plea in $200M Crypto Fraud

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SafeMoon chief technology officer, Thomas Smith, has pleaded guilty in a massive $200 million cryptocurrency fraud case, marking a significant turning point in the legal battle against the project’s leadership.

Guilty Plea to Securities and Wire Fraud

In a surprising reversal, Smith appeared before Magistrate Judge Cheryl Pollak in Brooklyn’s federal court on Feb. 20, withdrawing his previous not-guilty plea and admitting to securities fraud conspiracy and wire fraud conspiracy. Judge Pollak recommended that US District Judge Eric Komitee accept the plea, which could result in Smith facing a severe prison sentence.

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Wire fraud conspiracy carries a maximum penalty of 20 years in prison, while securities fraud conspiracy adds an additional 25 years—potentially leaving Smith behind bars for decades.

The $200 Million SafeMoon Scandal

Smith’s guilty plea follows charges filed in November 2023 by the US Justice Department and the Securities and Exchange Commission (SEC) against him, SafeMoon CEO Braden John Karony, and project creator Kyle Nagy. Prosecutors allege the trio orchestrated a fraudulent scheme, misleading investors about the safety of their assets.

Authorities claim that the three falsely promoted SafeMoon (SFM) as a secure investment by asserting that its liquidity was locked, preventing unauthorized access. However, investigators allege the team had full access to the liquidity pool and siphoned off more than $200 million for personal expenses, including luxury vehicles and real estate.

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SafeMoon once boasted a market capitalization between $5.7 billion and $8 billion, but its value plummeted by nearly 50% on April 20, 2021, following revelations that the liquidity pool was not locked as advertised.

Legal Troubles Mount for SafeMoon Executives

While Smith and Karony were arrested when the charges were first filed, Nagy remains at large, reportedly resurfacing in Russia. Karony has pleaded not guilty and previously attempted to have the charges dismissed. Smith also sought to have the case thrown out in September last year before ultimately pleading guilty.

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In a recent legal maneuver, Karony attempted to delay his trial, arguing that US President Donald Trump’s pro-crypto policy proposals could impact the case. However, Judge Komitee denied the request, scheduling Karony’s trial to begin on April 7, 2025.

Smith’s guilty plea raises concerns about the future of SafeMoon and its remaining executives. The possibility of Karony following suit and cooperating with authorities looms large, while investors who lost millions await justice. As regulatory scrutiny over crypto fraud intensifies, this case stands as a stark warning to those operating in the digital asset space.

Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

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