Unmasking the Safemoon Scandal as Former CTO Pleads Guilty to Fraud

The crypto world is no stranger to drama, but the unraveling of Safemoon stands out as a tale of deceit and downfall. Once a popular crypto for a brief period of time, this $8 billion project crumbled into bankruptcy, leaving investors reeling and its former chief technology officer, Thomas “Papa” Smith, facing a future behind bars. On Thursday, Smith quietly entered a guilty plea to conspiracy to commit securities fraud and wire fraud, marking the latest twist in one of crypto’s most notorious scams. What began as a promising venture in 2021 has now become a warning to others.

Smith, alongside CEO Braden John Karony and the elusive “Safemoon Dev” Kyle Nagy, launched Safemoon with grand aspirations. They introduced the Safemoon cryptocurrency, a DeFi token designed with a clever twist, featuring a burning mechanism and a 10% tax on every transaction. Half of that tax was redistributed to token holders, a strategy meant to keep the token’s value steady and attract a loyal following. For a while, it worked like a charm. The project soared to an impressive $8 billion market value, dazzling investors and fueling dreams of financial freedom. But beneath the surface, a storm was brewing, one that would eventually sink the entire operation.

The Collapse and the Cover-Up

Trouble erupted when the truth came to light. Smith, Karony, and Nagy weren’t just steering the ship; they were secretly raiding its coffers. The trio siphoned off a staggering $200 million from Safemoon, a revelation that sparked fraud charges from the U.S. Securities and Exchange Commission in November 2023. Just a month later, the company filed for bankruptcy, its once-lofty promises reduced to ashes. While Smith and Karony initially pushed back against the accusations, Nagy took a different route, reportedly fleeing to Russia with a $4.5 million payoff to secure his safety. The empire they’d built was crumbling, and the cracks could no longer be hidden.

Now, with Smith’s guilty plea, the narrative has shifted again. His decision to admit guilt has sparked speculation about a possible plea deal, a move that could shed further light on the inner workings of Safemoon’s fraudulent schemes. Investigative journalist Stephen Findeisen, better known as “Coffeezilla,” has been a relentless force in exposing this saga.

Three years ago, his team began peeling back the layers of Safemoon’s deception, uncovering evidence long before the SEC stepped in. “They told their community it was just FUD,” Findeisen remarked, referencing the fear, uncertainty, and doubt dismissed by Safemoon’s leadership. “Today, their CTO Thomas Smith pled guilty.” His work proved pivotal, offering a voice to the victims who watched their investments vanish.

In the aftermath, the Safemoon story hasn’t entirely faded away. The Web3 gaming outfit VGX Foundation stepped in to acquire the remnants of the project, launching a Safemoon memecoin as a lifeline for those burned by the collapse. It’s a small gesture, but for many, the damage is done. Smith’s guilty plea closes a chapter, yet the echoes of this scandal still linger.