Unpredictable events in the decentralized world have taken an unexpected turn, casting a shadow over SafeMoon, the once-proud leader in decentralized finance (DeFi), which is now swimming perilous waters.
SafeMoon filed for Chapter 7 bankruptcy with the District of Utah United States Bankruptcy Court on December 14. Attorney Mark Rose voluntarily submitted the petition, and Chief Judge Joel T. Marker is in charge of the proceedings.
The value of SafeMoon’s native token has dropped by over 40% in just a few hours due to the turbulent period, which has been marked by accusations of deceit and manipulation.
SafeMoon’s Meteoric Rise Ends In Fraud Charges
The explosive growth of SafeMoon was nothing short of amazing. A horde of eager investors lured by the prospect of quick money flocked to it as its value skyrocketed by an incredible 19,000%. The founders of the business immediately rose to fame, and the cryptocurrency revolution was associated with their identities.
But behind the success’s surface was a more sinister reality. The company’s explosive rise was the product of a well-planned campaign of deceit and manipulation rather than good technology or creative business practices.
US authorities detained SafeMoon executives last month on suspicion of conspiring to commit wire fraud, money laundering, and securities fraud. The charges stemmed from claims that the company’s founder, Kyle Nagy, CEO John Karony, and CTO Thomas Smith had stolen millions of dollars’ worth of investor assets while lying to clients.
SFMUSDT currently trading at $0.00005867 territory. Chart: TradingView.com
Five hours following the news, the SafeMoon (SFM) coin dropped from $0.000065 to $0.000045, according to CoinGecko. Compared to its peak price of $0.0030 on January 5, 2022, this indicates a sharp fall. As a result, its $1 billion market cap has dropped to to a sorry $17 million.
The same-named token’s parent company, SafeMoon disclosed that it owes between $100,000 and $500,000, and has between 50 and 99 creditors, with assets between $10 million and $50 million.
The Chapter 7 Bankruptcy
An entity filing for bankruptcy under Chapter 7 has their assets liquidated to pay creditors back. In contrast to the Chapter 11 bankruptcies that other cryptocurrency businesses have filed for, there is typically no intention of restructuring and relaunching the business.
The company was once a vital part of BitMart and the Axie Infinity gaming ecosystem, but it has since lost its shine, and the present event is finally laying out a plan for the token’s demise.
Meanwhile, former SafeMoon fans have also expressed their dissatisfaction with the announcement of the bankruptcy.
Recently learned about SafeMoon’s bankruptcy filing, and my thoughts are with my ex-colleagues who’ve been unpaid for a month, and the holders facing frustration and anger.
Reflecting back, the warning signs were there – notably, when many of us were abruptly fired over several…
— Santi (@Santi_NFT) December 14, 2023
Allegations of being duped by the SafeMoon developers are discussed on Reddit, where a member claims that “everyone has been cheated by the SafeMoon developers.”
Santiago Melgarejo, who used to work for SafeMoon as a nonfungible token analyst and sales specialist, said that the “warning signs” were always there. For example, many of the workers were fired without warning, even though many of them had worked for a month without getting paid.
Featured image from Shutterstock
