What Diet Smith admitted was that he destroyed the Space Coup by sending it into space. Last time I checked, the destruction of your own property was not a crime.
But really, what you are looking at ia an accidental death. He made a mistake. That mistake resulted in a lose of life.
Tracy now had to decide whether this was a “crime” or a “mistake”. The police do that all the time. In this case, he decided on “mistake” and walked away from the investigation.