SafeMoon CTO changes plea to guilty in $200M crypto fraud case

Cointelegraph Team Cointelegraph

The chief technology officer of SafeMoon LLC has submitted a guilty plea to two charges in a case that US prosecutors allege involves a multimillion-dollar crypto fraud scheme.

A Feb. 20 filing to a Brooklyn federal court shows SafeMoon tech chief Thomas Smith appeared before Magistrate Judge Cheryl Pollak to withdraw his prior not-guilty plea and plead guilty to securities fraud conspiracy and wire fraud conspiracy.

Judge Pollak recommended that US District Judge Eric Komitee — who is overseeing Smith’s case — accept the new plea.

Wire fraud conspiracy carries a maximum sentence of 20 years in prison, while securities fraud conspiracy carries a maximum sentence of 25 years in prison.

The Justice Department and the Securities and Exchange Commission filed simultaneous charges of securities and wire fraud conspiracy and money laundering conspiracy against Smith in November 2023 alongside SafeMoon CEO Braden John Karony and creator Kyle Nagy.

They alleged the trio sold a token called SafeMoon (SFM) and falsely claimed to SFM buyers that the token’s liquidity was locked and they couldn’t access it — when they allegedly could and later diverted the funds to themselves.

The SEC and prosecutors alleged the three executives siphoned off over $200 million from SFM and used investor funds for personal use to buy luxury vehicles and real estate.

The SEC and prosecutors had said SFM hit a market cap of between $5.7 billion to $8 billion before it tanked by nearly half on April 20, 2021 after it was publicly revealed the token’s liquidity pool was allegedly not locked as claimed.

Smith and Karony were arrested at the time of the charges. Nagy is at large but is reported to have resurfaced in Russia.

Karony has pleaded not guilty to the charges and moved to toss them in last April. Smith also filed to dismiss the charges in mid-September last year.

Earlier this month, Karony asked a judge to delay his criminal trial, arguing that US President Donald Trump’s crypto policy promises could result in at least one of his charges being dropped.

Judge Komitee knocked back the request and set for the trial to begin opening statements on April 7.

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