Former Safemoon CTO Thomas “Papa” Smith has pleaded guilty to fraud charges in connection to the $8 billion crypto project’s collapse. The case highlights one of DeFi’s biggest scandals.
Guilty Plea Marks Major Development in Safemoon Scandal
Thomas “Papa” Smith, former chief technology officer of the now-defunct Safemoon cryptocurrency project, has pleaded guilty to fraud charges, marking a significant development in one of the biggest financial scandals in decentralized finance (DeFi).
The U.S. Securities and Exchange Commission (SEC) charged Smith, along with Safemoon CEO Braden John Karony and co-founder Kyle Nagy, with defrauding investors by misappropriating over $200 million. Smith’s plea suggests he may be cooperating with authorities, while Karony continues to fight the charges, and Nagy has reportedly fled to Russia.
Safemoon CTO Rise and Fall
Launched in 2021, Safemoon (SFM) gained rapid popularity with its promise of high returns through a unique transaction tax mechanism. At its peak, the project reached an $8 billion market capitalization. However, investigations revealed that executives were siphoning investor funds for personal gain, leading to fraud charges in November 2023. The company declared bankruptcy a month later.
Investigative Reporting Uncovered Fraud
Journalist Stephen Findeisen, known as “Coffeezilla,” was among the first to expose Safemoon’s fraudulent activities, uncovering discrepancies in its financial structure. “Three years ago, we exposed Safemoon’s fraud,” Findeisen stated, “Today, their CTO has pled guilty.”
What’s Next?
Smith’s guilty plea raises speculation about a potential plea deal. Meanwhile, Safemoon’s assets were acquired by the VGX Foundation, which has since launched a Safemoon memecoin aimed at compensating victims.
As the legal proceedings continue, investors and industry observers await further developments in this high-profile crypto fraud case.
Stay updated on crypto fraud cases by following the latest regulatory news and legal actions in the digital asset space.
