Thomas Smith, the former Chief Technology Officer (CTO) of SafeMoon LLC, has admitted to his involvement in a high-profile fraud case that rocked the cryptocurrency community.
The plea came after months of legal battles, as Smith withdrew his previous not-guilty plea and faced serious charges of wire fraud conspiracy and securities fraud conspiracy.
Smith’s guilty plea has significant legal consequences, with the possibility of facing a combined sentence of up to 45 years in prison.
The wire fraud conspiracy charge carries a potential sentence of 20 years, while securities fraud conspiracy could result in an additional 25-year sentence.
Magistrate Judge Cheryl Pollak, who oversaw the plea hearing, has recommended that District Judge Eric Komitee accepts Smith's admission of guilt, although the final sentencing decision is yet to be made.
Smith is among three key figures involved in a criminal case brought forward by the US Department of Justice and the Securities and Exchange Commission (SEC) in November 2023.
The other two are SafeMoon’s CEO, Braden John Karony, and the company's creator, Kyle Nagy.
The case centres around the misleading promotion of SafeMoon (SFM), a cryptocurrency token, which allegedly defrauded investors of over $200 million.
Prosecutors and the SEC claim that the executives falsely assured SFM buyers that the token’s liquidity was “locked” and inaccessible.
SafeMoon’s CTO Thomas Smith (left) and CEO Braden John Karony (right).
In truth, the executives reportedly had full access to the liquidity pool, allowing them to divert funds for personal use.
These funds were allegedly used for extravagant purchases, such as luxury cars and high-end real estate.
At its peak, SafeMoon had an estimated market capitalisation between $5.7 billion and $8 billion, drawing in a large number of investors.
However, the token’s value plummeted by nearly 50% on 20 April 2021, following revelations that its liquidity pool was not locked as had been promised.
This sharp decline left many investors facing substantial losses.
Smith, along with Karony and Nagy, faces accusations of engaging in money laundering and fraud.
Prosecutors allege that they used misleading tactics, including wash trading, to inflate SafeMoon's market cap, further deceiving investors.
Smith and Karony were arrested at the time the charges were filed, while Nagy remains at large, with reports suggesting he has resurfaced in Russia.
Karony, the SafeMoon CEO, has pleaded not guilty to the charges and recently sought to have the case dismissed.
His request to delay the trial, citing potential changes in US cryptocurrency policy under former President Donald Trump, was rejected.
The trial is now set to begin on 7 April 2025.
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