- Thomas Smith, SafeMoon LLC’s Chief Technology Officer, has pleaded guilty to securities fraud conspiracy and wire fraud conspiracy charges
- Smith and other executives misled investors about the safety of their funds, falsely claiming that the liquidity pool was locked and inaccessible
- The fraudulent scheme involved the misappropriation of over $200 million, which was used for personal luxuries such as luxury vehicles and real estate
Thomas Smith, the Chief Technology Officer of SafeMoon LLC, has pleaded guilty to charges of securities fraud conspiracy and wire fraud conspiracy. Alongside other company executives, Smith deceived investors by falsely assuring them that their investments were secured in a locked liquidity pool when, in reality, the executives had access to these funds and diverted over $200 million for personal use, including purchasing luxury cars and real estate. SafeMoon was a headline-making monster during the 2020-2022 bull run, but the company collapsed in 2023.
Serious Charges Laid At SafeMoon Execs’ Doors
SafeMoon was launched in March 2021 as a decentralized finance (DeFi) token built on the Binance Smart Chain (BSC). It quickly gained popularity due to its unique tokenomics, which included a 10% transaction fee—half of which was redistributed to existing holders, while the other half was used to provide liquidity. This model incentivized long-term holding and discouraged selling, creating a strong community-driven marketing strategy.
SafeMoon’s developers, including founder Kyle Nagy and CEO John Karony, promised revolutionary updates such as a SafeMoon wallet, an exchange, and even blockchain innovations. However, concerns over the transparency of the liquidity pool and the centralization of token control raised red flags among investors, and by 2022, multiple reports and investigations suggested that SafeMoon’s executives had misled investors about the security of their funds, ultimately leading to legal action by the U.S. Department of Justice and the Securities and Exchange Commission (SEC).
The Liquidity Pool Lie
Smith, Nagy, and Karony were hit with a litany of charges in November 2023, accusing the trio of falsely promoting the safety of investor funds by claiming that the liquidity pool was “locked” and inaccessible to anyone, including the company’s executives. Contrary to these assurances, the executives retained access to the funds and misappropriated over $200 million for personal enrichment.
These misappropriated funds were allegedly used to purchase luxury vehicles, such as custom Porsche sports cars, and to acquire real estate properties in New Hampshire, Utah, and Florida. The fraudulent activities came to light as investors suffered significant losses upon discovering that the liquidity pool was not secured as claimed.
Smith has decided that the best way out for him is to plead guilty to charges of securities fraud conspiracy and wire fraud conspiracy, which carries a maximum of 25 years in prison. Smith’s guilty plea leaves Karony with a decision to make while Nagy remains at large.
