In a startling turn of events, the decentralized finance protocol SafeMoon (SFM) experienced a substantial 31% decrease in its token value within a mere five hours of officially declaring Chapter 7 bankruptcy. This significant decline is compounded by a series of setbacks. The most notable was the apprehension of key company members by the US Department of Justice for allegedly defrauding customers of millions of dollars.
Bankruptcy Filing and Employee Challenges
On Dec. 14, SafeMoon initiated Chapter 7 bankruptcy, colloquially referred to as “liquidation bankruptcy.” This further caused reverberations throughout the crypto community. Attorney Mark Rose filed the voluntary petition with the United States Bankruptcy Court in the District of Utah. Additionally, Chief Judge Joel T. Marker was assigned to oversee the case.
A purported letter, allegedly from the firm’s chief restructuring officer, emerged on Reddit, elucidating that the bankruptcy was the primary cause for the company’s inability to meet employee wage obligations preceding the filing. The letter instructed employees to file claims in bankruptcy court to recover their unpaid wages.
This latest setback occurred just a month after the United States Securities and Exchange Commission (SEC) levied charges against SafeMoon, its founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith for violating securities laws. The SEC characterized the company’s actions as “a massive fraudulent scheme,” further eroding investor confidence.
Also Read: This Crypto Tycoon Predicted ‘SafeMoon is a Scam’ in 2021
Impact on the Market
Subsequent to the bankruptcy filing, SafeMoon’s crypto noted a steep drop from $0.000065 to $0.000045. This was within a brief five-hour period. Despite a momentary recovery to $0.000061 within a rapid span of 10 minutes, the damage had been inflicted. At the latest update, SFM is trading at $0.00005729. This marked a substantial 98.2% decline from its peak value of $0.0033 on Jan. 5, 2022. The market cap, once standing at $1 billion, has been reduced to a mere $34.5 million.
Additionally, at press time, SFM was trading at $0.00005906 with a 13% drop.
Investor Discontent
Former supporters of SafeMoon expressed their discontent on Reddit. Some said that they were deceived by the developers, claiming they were “rug-pulled.” User Jtenka further expressed frustration, stating,
“The fact of the matter is, everyone has been scammed by the SafeMoon developers, including the mods that supported and trusted SafeMoon.”
The swift depreciation of SafeMoon’s token value following the Chapter 7 bankruptcy filing and the series of legal challenges pose substantial uncertainties about the future of this once-prominent decentralized finance protocol. Investors and the wider cryptocurrency community eagerly await further developments as the aftermath of these events continues to unfold.
Also Read: SafeMoon Exploit Funds Moved Via CEXs May Aid Law Enforcement