SafeMoon fell 31% in five hours after filing for Chapter 7 bankruptcy
Decentralized financial protocol SafeMoon (SFM) is down 31% after the company filed for bankruptcy.
In a Dec. 14 filing in U.S. Bankruptcy Court for the District of Utah, Safemoon officially filed for Chapter 7 bankruptcy, also known as “liquidation bankruptcy.” The plea was filed by attorney Mark Rose with Chief Justice Joel T. A marker assigned to the case.
A screenshot of a letter to employees purporting to be written by the company's chief restructuring officer has surfaced on Reddit, explaining why it failed to pay employee wages before filing for bankruptcy.
“You will need to file a claim in bankruptcy court for unpaid wages,” the document read.
The latest crackdown comes a month after the U.S. securities regulator accused SafeMoon, founder Kyle Nagin, CEO John Caroni and CTO Thomas Smith of breaching securities laws in November in what the regulator called a “massive fraud scheme.”
According to CoinGecko, the cryptocurrency fell from $0.000065 on December 14th at 8:24pm UTC to $0.000045 within five hours of the news. But it quickly-fired back to $0.000061 in 10 minutes.
SMF fell 31% following the bankruptcy filing before recovering slightly. SFM is currently trading at $0.00005729. The token has dropped 98.2% from its high of $0.0033 on January 5, 2022, and its once $1 billion market cap is now down to $34.5 million.
Several former SafeMoon fans expressed frustration on Reddit reflecting on the bankruptcy, saying they were dragged down by SafeMoon's developers.
“The fact of the matter is that everyone has been scammed by the SafeMoon developers, including the mods who support and trust SafeMoon,” wrote Reddit user Jetenka.
Another Reddit user “Anonymousmon42069” said: “I never want to talk about how much we all got scammed and especially the money I lost.” For those idiots who still think SafeMoon has a chance and are ‘going to the moon': get help.”
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“The warning signs were there,” said Santiago Melgarejo, a former Invincible token analyst and sales professional at Safemoon, especially when many workers were suddenly fired, many of whom were working without pay.
I recently learned of SafeMoon's bankruptcy, and my thoughts go out to my former colleagues who have not been paid for a month, and the owners are frustrated and angry.
In retrospect, the warning signs were there — specifically, many of us suddenly had multiple…
— Santi (@Santi_NFT) December 14, 2023
Safe Moon was also used in March, resulting in a net loss of $8.9 million.
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