Safemoon CTO Thomas Smith has pleaded guilty to a $200 million cryptocurrency fraud scheme. According to investigators, he participated in a scheme to misappropriate funds raised by the crypto project.

As the trial progressed, it emerged that the fraud was part of a larger scheme to artificially inflate the value of tokens and conceal the true financial performance. In November 2023, the Justice Department and the Securities and Exchange Commission indicted Smith on concurrent charges of conspiracy to commit securities fraud, wire fraud, and money laundering, along with SafeMoon CEO Braden John Caroni and creator Kyle Nagy.

They alleged that the trio sold a token called SafeMoon (SFM) and falsely told SFM buyers that the token’s liquidity was locked and they could not access it when they supposedly could, and later diverted the funds to themselves.

The prosecution alleges that the CTO’s actions contributed to the false impression that the project was stable and growing, which led to unscrupulous investment decisions.

The charges include manipulation of user assets and the creation of artificial demand for the tokens. An investigation revealed that a significant portion of the funds raised were diverted to the defendants’ personal accounts. SafeMoon, which had previously positioned itself as an innovative crypto project, now faces serious consequences in the form of lawsuits and loss of user trust.

Smith and Caroni were arrested during the arraignment. Nagi remains at large. Caroni has pleaded not guilty to the charges.

This incident has become yet another reminder of the importance of regulating the crypto market and the need to thoroughly check projects before investing. Financial regulators are tightening their control over the crypto industry to avoid similar incidents in the future.