SafeMoon Crashes after Filing for Bankruptcy
15 Dec, 2023 ● Coin news
Five hours after the company behind SafeMoon filed for bankruptcy, the token of the decentralized finance protocol dropped 31%.
SafeMoon formally filed for Chapter 7 bankruptcy, commonly referred to as "liquidation bankruptcy," with the United States Bankruptcy Court for the District of Utah on December 14.
Attorney Mark Rose filed the voluntary petition, and Judge Joel Marker was given the case.
On Reddit, a screenshot of a letter allegedly written by the company's chief restructuring officer to staff members explained that the company's bankruptcy run was the reason it was unable to pay staff salaries prior to the filing.
The most recent setback occured barely one month after SafeMoon, its CEO John Karony, its founder Kyle Nagy, and its chief technology officer Thomas Smith were accused by the US Securities and Exchange Commission (SEC) of breaking securities laws in what the agency called “a massive fraudulent scheme.”
Five hours after the news broke, the SafeMoon (SFM) token dropped from $0.000065 at 8:24 pm UTC on December 14 to $0.000045, according to CoinGecko
Nevertheless, it quickly recovered to $0.000061 over the course of ten minutes.
Currently, SFM is being traded for $0.00005729. The token's market capitalization, which was once $1 billion, has now dropped to $34.5 million; a 98.2% decrease from its peak price of $0.0033 on January 5, 2022.
On Reddit, a number of former SafeMoon backers vented their displeasure over the company's bankruptcy, accusing the developers of pulling their strings.
Reddit user u/Jtenka stated, "The fact of the matter is, everyone has been scammed by the SafeMoon developers, including the mods that supported and trusted SafeMoon.”
"Never wanna even talk about how bad we all got scammed and especially the money I lost," commented u/anonyamon42069, a different Reddit user. "To the idiots that still think SafeMoon has a chance and will ‘go to the moon’: seek help.”
The "warning signs were there" all along, according to Santiago Melgarejo, a former NFT analyst and sales specialist for SafeMoon. This was especially true when many employees were fired suddenly after working for a month without receiving compensation.
SafeMoon also suffered an exploit in March which resulted in a net loss of $8.9 million.
Sources:
https://cointelegraph.com/news/safemoon-bankruptcy-sfm-token-falls-31-percent-fraud-sec
https://storage.courtlistener.com/recap/gov.uscourts.utb.461366/gov.uscourts.utb.461366.1.0.pdf
https://twitter.com/Santi_NFT/status/1735444645847388624
