Safemoon executive pleads guilty in $200M fraud case as project pivots to memecoin strategy

Former Safemoon Chief Technology Officer (CTO) Thomas Smith has pleaded guilty to charges related to a $200 million fraud scheme tied to the controversial crypto project.

On Feb. 20, investigative YouTuber Stephen Findeisen, known as Coffeezilla, reported the development, recalling that he had exposed Safemoon’s fraudulent practices three years ago. At the time, the project dismissed concerns as baseless fear, uncertainty, and doubt (FUD).

However, Smith has now admitted to misleading investors about Safemoon’s liquidity and faces a maximum sentence of 20 years for wire fraud conspiracy and 25 years for securities fraud.

Meanwhile, his admission marks a shift from his earlier not-guilty plea in a case involving investor deception and misappropriation of funds.

However, the court will consider his cooperation during the investigation when determining his sentence.

SEC charges against Safemoon

Smith’s guilty plea follows the US Securities and Exchange Commission’s (SEC) November 2023 crackdown on the crypto project’s leadership team, which included him, Safemoon CEO Braden John Karony, and project creator Kyle Nagy.

The financial agency charged them with multiple federal law violations, including fraud, conspiracy, and money laundering.

The regulators accused them of falsely marketing Safemoon as a secure investment with a locked liquidity pool. However, the investigators later discovered that the team had unrestricted access to these funds, siphoning over $200 million for personal expenses.

Reports indicate that the stolen money funded luxury cars, real estate, and other high-end purchases.

Authorities also alleged that Safemoon executives manipulated trading activity to create a false sense of demand. While Smith has admitted guilt, Karony continues to deny the charges, and Nagy remains at large.

Safemoon memecoin

Smith’s guilty plea comes as the project undergoes a restructuring following its acquisition by a new entity.

On Feb. 14, Safemoon’s new team announced that its community fully controls the project.

The team plans to launch a Solana-based memecoin as part of its revival strategy. The project will be community-driven, prioritizing engagement without a predefined utility.

The project stated:

“SafeMoon is a meme coin. That’s what it should have been from day one. No convoluted promises, no forced utility—just a movement. Because at the heart of every legendary meme coin is a simple, compelling idea. A brand. A rallying cry that people connect with on a deeper level.”

Meanwhile, the team has warned investors to remain cautious, emphasizing that they have not yet released the official contract address for the new token.

Mentioned in this article