Crypto firm SafeMoon filed for Chapter 7 bankruptcy on December 14th, resulting in an immediate 31% plunge of its token price.
The move comes on the heels of SafeMoon executives being criminally charged with securities fraud conspiracy, wire fraud conspiracy, and money laundering conspiracy by U.S. authorities last month.
Keypoints
- SafeMoon filed for Chapter 7 bankruptcy, also known as “liquidation bankruptcy”, on December 14th
- The filing came shortly after SafeMoon executives were charged by the SEC with securities fraud and arrested
- The SafeMoon token plunged 31% in 5 hours following the bankruptcy announcement
- The token has fallen over 98% from its all-time high price of $0.0033 in January 2022
- Many former SafeMoon supporters expressed anger, saying they feel scammed and rug-pulled
SafeMoon CEO John Karony, CTO Thomas Smith, and creator Kyle Nagy stand accused of misappropriating millions in investor funds and misleading customers. The charges allege that the executives promoted fraudulent claims about SafeMoon’s products and technology to stimulate trading activity and drive up the token’s price.
In its bankruptcy filing to the U.S. Bankruptcy Court for Utah, SafeMoon claims estimated assets between $10 million and $50 million, with 50 to 99 creditors owed between $100,000 and $500,000. As a Chapter 7 filing, the case will result in asset liquidation rather than financial reorganization.
The SafeMoon token, which once boasted a $1 billion market capitalization, has crashed over 98% from its record high of $0.0033 in January 2022. Its market cap now sits below $35 million, as holders rush to offload the rapidly depreciating asset.
Many vocal supporters in online communities like Reddit have expressed outrage regarding the bankruptcy, claiming the episode “scammed” investors who believed fervent promises of imminent exchange listings and adoption from SafeMoon’s marketing machine. One Redditor wrote, “everyone has been scammed by the SafeMoon developers.”
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
The bankruptcy caps a disastrous 2022 for the project. In March, SafeMoon suffered an exploit resulting in $8.9 million stolen. Later that month, a core team member abruptly departed after just one month, warning investors to “be careful.” In May, a hacker mysteriously returned $1 million to the protocol.
SafeMoon also faces an SEC lawsuit filed in conjunction with the criminal charges, accusing the firm of violating securities laws through fraudulent misrepresentations made to induce trading. The civil charges mirror the criminal allegations regarding misused investor funds and false product claims.
While some loyal token holders maintain hopes of appreciation, most objective observers see SafeMoon’s bankruptcy as the final nail in the coffin for an operation plagued by dysfunction, scandal, and alleged criminality from its earliest days. For many investors, the saga serves as an expensive reminder about the risks of chasing hype in the crypto industry.
