Safemoon’s Former CTO Pleads Guilty to Fraud

Thomas “Papa” Smith used to be the chief technology officer at Safemoon, an $8 billion decentralized finance (DeFi) project that went bankrupt in 2023. Now he may end up a felon, after quietly pleading guilty on Thursday to conspiracy to commit securities fraud and conspiracy to commit wire fraud.

(Court documentation showing Thomas Smith’s guilty plea / Stephen Findeisen)

Smith and his fellow co-founders CEO Braden John Karony and “Safemoon Dev” Kyle Nagy, launched Safemoon in 2021 and created the Safemoon cryptocurrency (SFM), a DeFi token that combined burning and a 10% tax on each token transaction, 5% of which would be redistributed to all token holders. The tactic was supposed to stabilize SFM’s value.

(Thomas “Papa” Smith / globalnewswire.com)

The approach seemed to work early on, as SFM topped $8 billion in market capitalization. But trouble began brewing when it was discovered that Smith, Karony, and Nagy had been secretly stealing millions from the firm, $200 million to be exact, a development that led to fraud charges from the U.S. Securities and Exchanges Commission (SEC) in November 2023. The company went bankrupt a month later.

Smith and Karony fought the charges while Nagy fled to Russia, where he allegedly paid $4.5 million “for his peaceful stay,” according to Newsweek.

And now Smith has changed his tune and filed a guilty plea to the charges brought against him, leading some to speculate a plea deal might be in the works.

“Three years ago we exposed Safemoon’s fraud,” said investigative journalist Stephen Findeisen, more commonly known as “Coffeezilla.” “They told their community it was just ‘FUD.’ Today their CTO Thomas Smith pled guilty,” he added. Findeisen and his team spent months unraveling the fraudulent activity at Safemoon and revealed damning evidence more than a year before the company’s executives were charged.

Safemoon was acquired by Web3 gaming entity VGX Foundation. The foundation recently launched a Safemoon memecoin as a way to compensate affected victims.

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