SafeMoon LLC’s Chief Technology Officer, Thomas Smith, pleaded guilty to two criminal charges—securities fraud conspiracy and wire fraud conspiracy—related to a fraud scheme involving the SafeMoon token, according to a court filing on Thursday. The charges arose from an investigation into the company’s alleged misuse of investor funds.
Smith was originally indicted in November 2023 alongside SafeMoon co-founder Kyle Nagy and CEO Braden John Karony. At that time, he pleaded not guilty, but he has now reversed his stance, admitting guilt to both conspiracy charges. The indictment also included accusations of money laundering against the three executives. The U.S. Department of Justice alleges that the defendants misled investors by claiming SafeMoon’s liquidity pools were locked to prevent withdrawal risks, while secretly retaining access and diverting millions of dollars for personal use.
Prosecutors say Nagy, Karony, and Smith hid the source of the misappropriated funds using unhosted crypto wallets, complex transaction routing, and pseudonymous accounts on centralized exchanges. The funds were reportedly used to purchase luxury items, including cars and real estate. Specifically, Smith used back-channel transactions to buy a custom Porsche 911 and a non-fungible token (NFT) with money from the liquidity pool.
Ivan J. Arvelo, Special Agent in Charge of HSI, New York, stated that SafeMoon’s executives built their company’s value to over $8 billion but spent millions of investor dollars on personal luxuries instead of fulfilling promises to clients. He noted that their extravagant purchases would not shield them from legal consequences.
Karony is scheduled to face trial later this month after a judge rejected his request to delay proceedings until April, despite his argument that changing U.S. cryptocurrency regulations justified a postponement. Nagy’s status remains unclear, with reports indicating that the former SafeMoon co-founder is currently in Russia, evading legal action.
