The decentralized finance protocol SafeMoon experienced a significant drop in its token value, plummeting 31% in just five hours, following the company’s filing for bankruptcy.
On December 14, SafeMoon filed for Chapter 7 bankruptcy, also known as liquidation bankruptcy, in the United States Bankruptcy Court for the District of Utah. The filing was made by attorney Mark Rose, with Judge Joel Marker overseeing the case. A leaked letter on Reddit, allegedly from the company’s chief restructuring officer, informed employees of the inability to pay wages due to the bankruptcy proceedings, advising them to file claims for unpaid wages in bankruptcy court.
This development comes shortly after the U.S. Securities and Exchange Commission (SEC) charged SafeMoon, along with its founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith, with securities law violations. The SEC described their actions as part of a “massive fraudulent scheme.”
The value of the SafeMoon (SFM) token saw a rapid decline, dropping from $0.000065 to $0.000045 following the bankruptcy news, based on data from CoinGecko. However, it experienced a brief recovery, spiking to $0.000061 within 10 minutes.
As of now, the SFM token is trading at approximately $0.00005729. This represents a drastic fall of 98.2% from its peak price of $0.0033 on January 5, 2022. The market cap of SafeMoon has also significantly decreased, from once being $1 billion to now standing at around $34.5 million.
The bankruptcy and the preceding events have led to a wave of frustration among former SafeMoon supporters on platforms like Reddit. Many users expressed feelings of being deceived by the SafeMoon developers. One user, u/Jtenka, commented on the general sentiment of being scammed by the developers, including the moderators who had supported and trusted SafeMoon. Another user, u/anonyamon42069, expressed regret over the financial losses and skepticism towards any future prospects for SafeMoon.
Reflecting on the situation, Santiago Melgarejo, a former nonfungible token analyst and sales specialist for SafeMoon, noted that there were warning signs, especially when many employees were suddenly fired despite working without pay for a month.
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