Thomas Smith has changed his previous not guilty plea to guilty with regards to the securities and wire fraud conspiracy charges in a multi-million dollar crypto fraud case involving misleading investors and misappropriating funds.
CTO Changes Plea
SafeMoon LLC’s Chief Technology Officer, Thomas Smith, has pled guilty to securities fraud conspiracy and wire fraud conspiracy, admitting to his role in a multi-million dollar cryptocurrency fraud scheme.
Smith’s guilty plea was submitted on February 20 in a Brooklyn federal court before Magistrate Judge Cheryl Pollak, who has recommended that U.S. District Judge Eric Komitee accept the plea. The charges carry severe penalties, with the wire fraud conspiracy charge punishable by up to 20 years in prison and the securities fraud conspiracy charge carrying a maximum of 25 years.
Background of the Case
Smith’s admission comes as part of a broader case filed in November 2023 by the U.S. Department of Justice and the Securities and Exchange Commission (SEC). The case also includes SafeMoon’s CEO, Braden John Karony, and the project’s creator, Kyle Nagy. Prosecutors allege the trio misled investors regarding the liquidity of the SafeMoon token (SFM), falsely claiming that its liquidity pool was locked while secretly retaining access to the funds. These funds were allegedly misappropriated for personal enrichment.
Alleged Misuse of Funds
According to SEC filings, over $200 million was illicitly siphoned from SafeMoon’s liquidity pool. The misappropriated funds were allegedly used to purchase luxury vehicles and real estate. At its peak, SafeMoon’s market capitalization ranged between $5.7 billion and $8 billion. However, the token’s value plummeted nearly 50% on April 20, 2021, following revelations that the liquidity pool was not, in fact, locked as previously claimed.
Legal Proceedings and Co-Defendants’ Status
Smith and Karony were both arrested at the time of the charges, while Nagy remains at large, with reports indicating he may have relocated to Russia. Unlike Smith, Karony has pleaded not guilty and has moved to have his charges dismissed.
In a recent legal development, Karony sought to delay his trial, claiming that the policy changes under President Donald Trump could lead to some of the charges being dropped. However, the request was denied, and his trial is scheduled to commence on April 7.
Implications for the Crypto Industry
The SafeMoon case serves as a warning to investors and regulatory authorities regarding the risks of fraudulent practices in the cryptocurrency sector. It highlights the need for stronger investor protections, increased regulatory oversight, and greater transparency within the industry. As authorities continue to crack down on fraudulent crypto operations, companies operating in the space may face heightened scrutiny to ensure compliance with legal and financial regulations.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
