Thomas Smith, the chief technology officer of the now-defunct cryptocurrency firm SafeMoon, has pleaded guilty to securities fraud conspiracy and wire fraud conspiracy in connection with a multimillion-dollar scheme that allegedly defrauded investors of over $200 million.
Per a recent filing with the Brooklyn federal court, Smith admitted to misleading investors about the status of SafeMoon’s liquidity pool, falsely claiming it was locked and inaccessible. Prosecutors allege he, along with CEO Braden John Karony and creator Kyle Nagy, diverted client funds for personal use, thereby engaging in securities fraud and wire fraud.
In his recent court appearance before Magistrate Judge Cheryl Pollak, Smith withdrew his initial not-guilty plea and formally pleaded guilty to both charges. Judge Pollak has since recommended that U.S. District Judge Eric Komitee, who is overseeing the case, accept Smith’s new plea.
If accepted, Smith faces a maximum sentence of 20 years for wire fraud conspiracy and up to 25 years for securities fraud conspiracy. The sentencing decision now rests with Judge Komitee, who will weigh the severity of the offenses and Smith’s cooperation in the ongoing investigation.
SafeMoon executives faced charges from the U.S. Securities and Exchange Commission and the Justice Department in November 2023. Smith, Karonym, and Nagy were accused of conspiracy, fraud, and money laundering tied to the deceptive promotion and handling of the SafeMoon token (SFM), which was classified as an unregistered crypto asset security.
According to the SEC, the team falsely marketed SFM as a secure investment, claiming that its liquidity pool was locked and inaccessible to the project’s insiders. In reality, prosecutors allege the executives retained full access and siphoned off more than $200 million in investor funds.
These funds were allegedly used for personal gain, including luxury cars, expensive real estate, and other high-end purchases.
The trio was also accused of engaging in wash trading—a deceptive tactic where the same asset is bought and sold simultaneously to create misleading market activity. With this, they were able to inflate the token’s market cap to as high as $8 billion at its peak, which later crashed, leaving thousands of investors with significant losses.
Smith and Karony were arrested shortly after the charges were filed, while Nagy remains at large.
Karony has pleaded not guilty to all charges and previously attempted to have them dismissed. His request for a trial delay was recently denied, and opening statements are set to begin on April 7.
