- SafeMoon CTO Thomas Smith pleaded guilty to securities fraud conspiracy and wire fraud conspiracy.
- Prosecutors say SafeMoon executives took over $200 million from investors after falsely claiming the token’s liquidity was locked.
SafeMoon LLC’s chief technology officer, Thomas Smith, has pleaded guilty to securities fraud conspiracy and wire fraud conspiracy in a case involving an alleged multimillion-dollar cryptocurrency fraud scheme.
According to a court filing on Feb. 20, Smith withdrew his initial not-guilty plea and appeared before Magistrate Judge Cheryl Pollak in a Brooklyn federal court to enter a guilty plea. Judge Pollak suggested to US District Judge Eric Komitee that the plea should be accepted and could result in multiple years of imprisonment.
The possible prison term for wire fraud conspiracy reaches up to 20 years, but securities fraud conspiracy allows for a penalty of up to 25 years. According to the current charges, investors faced deceptive information regarding SafeMoon’s liquidity protection combined with the official diversion of fund money to personal accounts.
Prosecutors Allege $200 Million in Misappropriated Funds
In November 2023, the Justice Department and the Securities and Exchange Commission (SEC) presented charges against Smith together with his co-defendants, SafeMoon CEO Braden John Karony and project creator Kyle Nagy. As highlighted in our news, the three perpetrators faced felony charges for designing a deceiving operation that misled clients about their liquidity system’s security.
Official statements claimed the business executives deceived investors by falsely declaring that their token pool funds were secured from all access, including their own. The prosecutors stated the lack of liquidity pool security during their investigation, which revealed the defendants drained more than $200 million from the pool. The stolen money paid for luxury cars, real estate, and a variety of personal assets.
SafeMoon (SFM) reached its peak market value at $8 billion until a major sell-off slashed its value by 50% on April 20, 2021. The project’s recent market value drop emerged when experts found evidence denying the claims about locked liquidity pools.
According to the criminal charges, Nagy continues to evade arrest despite the other defendants’ detention. Media sources indicate that Nagy is believed to be hiding in Russia, while his specific location remains unknown.
Karony Fights Charges as Trial Date Approaches
Unlike Smith, Karony has pleaded not guilty and is actively challenging the charges. The defendants, including Karony, filed applications for dismissal of their charges in April 2023, while Smith filed a similar request in September of that year.
When Karony filed his defense motion, he asked for a delay in his trial based on former US President Donald Trump’s potential policy changes. According to Karony, Trump’s planned crypto regulations could result in dropping at least one of his pending criminal charges.
However, Judge Komitee denied the request and confirmed that Karony’s trial would proceed as scheduled, with opening statements set for April 7.
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