She manipulated payroll records to divert funds into her own crypto wallets, and used the stolen money to finance a lavish lifestyle before being caught. Meanwhile, SafeMoon CTO Thomas Smith pleaded guilty to securities and wire fraud conspiracy for his role in a scheme that allegedly siphoned over $200 million from investors. In response to increasing crypto-related crimes, the SEC launched a new Cyber and Emerging Technologies Unit to combat fraud, particularly in blockchain and emerging markets. Fraudster Jailed After Stealing Millions from Bybit A Singapore court sentenced Ho Kai Xin to nearly ten years in prison for defrauding $5.7 million from the crypto exchange Bybit. The verdict was reported by The Straits Times on Feb. 20, and was made after her guilty plea to 44 charges, including five counts of cheating and eight counts related to dealing with the proceeds of criminal activity. Ho Kai Xin Ho worked at the crypto networking platform WeChain, and was responsible for handling payroll for Bybit. While leading the payroll team, she manipulated payroll data to divert funds into crypto wallets she controlled. Her fraudulent activities started in May of 2022, and she continued undetected until February of 2023. She was busted when a WeChain representative alerted authorities. She was subsequently arrested in April that year. The court heard that Ho amended payroll records using Microsoft Excel to falsely increase payments owed by Bybit. She then funneled approximately $4.2 million into her personal crypto wallets before converting it into fiat currency. These funds were used to finance a lavish lifestyle, including placing a deposit of almost $750,000 on a penthouse that is valued at over $3.7 million. She also splurged on luxury goods, including bags, rings, shirts, and shoes from Louis Vuitton. Authorities managed to recover more than $1.1 million in Tether (USDT) from her electronic wallets and over $140,000 from one of her bank accounts. Police also seized assets worth close to $330,000, including a Mercedes-Benz car. Despite these recoveries, Ho did not make any attempts to repay the remaining stolen funds. Seized items Her sentencing happened after she was handed a separate six-week prison term last month for contempt of court. She spent the misappropriated money despite being ordered not to by the court. Her latest sentence will begin after she completes her current term, which started on Jan. 27. During the investigation, Ho tried to mislead authorities by fabricating the existence of a cousin named ”Jason Teo,” whom she falsely blamed for the illicit transactions. Investigators later confirmed that no such person actually existed, which only further strengthened the case against her. Her defense lawyer, James Gomez, asked for a reduced sentence of eight years and eight months due to her role as a mother of two young children. He argued that her actions stemmed from a lapse in judgment and that she since reflected on the impact of her crimes on her family, Bybit, and the justice system. However, prosecutors pointed out that Ho became emboldened when her actions initially went unnoticed. SafeMoon CTO Pleads Guilty to Crypto Fraud The chief technology officer (CTO) of SafeMoon LLC, Thomas Smith, also recently pleaded guilty to securities fraud conspiracy and wire fraud conspiracy in a case that US prosecutors allege involves a multimillion-dollar crypto fraud scheme. A court filing on Feb. 20 revealed that Smith appeared before Magistrate Judge Cheryl Pollak to withdraw his initial not-guilty plea. Judge Pollak recommended that US District Judge Eric Komitee accept the new plea, which carries a potential sentence of up to 45 years in prison. This includes 20 years for wire fraud conspiracy and 25 years for securities fraud conspiracy. The Justice Department and the Securities and Exchange Commission (SEC) filed charges against Smith in November of 2023, alongside SafeMoon CEO Braden John Karony and the project's creator Kyle Nagy. Authorities alleged that the trio misled investors by falsely claiming that SafeMoon’s liquidity pool was locked, which prevented them from accessing funds. In reality, prosecutors say they were able to access the liquidity and siphoned more than $200 million for personal use, including the purchase of luxury vehicles and real estate. SafeMoon’s market cap reportedly peaked between $5.7 billion and $8 billion before a sharp decline on April 20, 2021, when it was revealed that the liquidity pool was allegedly not locked as previously claimed. The news triggered a massive sell-off, which cut SafeMoon’s value nearly in half. Smith and Karony were arrested at the time of the charges, while Nagy is still at large and is believed to have resurfaced in Russia . Both Smith and Karony initially filed motions to dismiss the charges. Earlier this month, Karony requested a delay in his criminal trial by arguing that former US President Donald Trump’s crypto policy promises could potentially lead to the dismissal of at least one of his charges. Judge Komitee denied the request, keeping the trial schedule intact with opening statements set for April 7. SEC Launches New Unit to Combat Crypto Fraud In response to these kinds of crypto crimes, the US SEC announced the creation of a new division that is dedicated to tackling cyber misconduct, including fraud involving blockchain and crypto assets. The newly formed Cyber and Emerging Technologies Unit will replace the SEC’s previous Crypto Assets and Cyber Unit and will be composed of approximately 30 fraud specialists and attorneys across multiple SEC offices. Its main focus will be to protect retail investors from bad actors in emerging technologies. Laura D’Allaird , who previously led the SEC’s Crypto Assets and Cyber Unit, will take charge of the new unit. She served as counsel to SEC Commissioner Jaime Lizárraga and is based in Washington, DC. Acting SEC Chair Mark Uyeda said that the new unit will work to root out those who misuse technological innovation to harm investors and diminish confidence in emerging markets. The unit’s focus will include fraudulent activities involving securities transactions, social media manipulation, deceptive websites, and blockchain-related scams. The announcement was made as the cryptocurrency sector is grappling with fresh allegations of insider trading, particularly in meme coins. One of the more major cases involves the LIBRA meme coin, which was promoted by Argentine President Javier Milei before collapsing in a suspected rug pull. The scam reportedly allowed the team behind the token to pocket more than $100 million, while investors suffered losses exceeding $251 million. The token’s sharp rise and sudden collapse fueled a lot of criticism of the industry’s regulatory gaps. Some, including The Coin Bureau’s co-founder Nic Puckrin, blamed regulators for failing to provide clear guidance on these assets. (Source: Nansen ) The decentralized exchange Jupiter, where the LIBRA meme coin was traded, acknowledged that the launch of the token was widely known in meme coin circles before its public sale. In response, Jupiter started an internal probe, and a Meteora co-founder stepped down after the controversy. The fallout from LIBRA’s collapse also intensified calls for stricter oversight in the crypto market.
