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The token associated with the decentralized finance protocol SafeMoon has plummeted by 31% within five hours following the company’s bankruptcy filing.
SafeMoon formally submitted a Chapter 7 bankruptcy petition, commonly referred to as “liquidation bankruptcy,” in a filing dated Dec. 14 to the United States Bankruptcy Court for the District of Utah. The voluntary petition was lodged by attorney Mark Rose, with Judge Joel Marker appointed to oversee the case.
SafeMoon bankruptcy filing. Source: CourtListener
A screenshot of a correspondence to employees, allegedly composed by the firm’s chief restructuring officer, emerged on Reddit, detailing that the bankruptcy proceedings were the reason for the inability to pay employee wages prior to the filing.
“You will need to submit a claim in the bankruptcy court for your unpaid wages,” the document stated.
This latest setback follows just a month after the U.S. Securities and Exchange Commission accused SafeMoon, along with its founder Kyle Nagy, CEO John Karony, and chief technology officer Thomas Smith, of breaching securities laws in what the regulator characterized as “a massive fraudulent scheme.”
The SafeMoon (SFM) token decreased from $0.000065 on Dec. 14 at 8:24 pm UTC to $0.000045 within five hours after the announcement, according to CoinGecko. Nevertheless, it quickly bounced back to $0.000061 in a rapid 10-minute interval.
SFM is presently trading at $0.00005729. The token has fallen 98.2% from its peak price of $0.0033 on Jan. 5, 2022, and its former market capitalization of $1 billion has now shrunk to $34.5 million.
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SFM’s change in price over the last 24 hours. Source: CoinGecko
Numerous former SafeMoon advocates expressed their anger on Reddit concerning the bankruptcy, claiming they were deceived by the SafeMoon developers.
“The reality is that everyone has been conned by the SafeMoon developers, including the moderators who backed and believed in SafeMoon,” stated Reddit user u/Jtenka.
Another Reddit user, u/anonyamon42069, remarked: “I never want to discuss how badly we all got scammed, especially considering the money I lost. To those who still think SafeMoon has a chance and will ‘go to the moon’: get help.”
Related: SafeMoon hacker’s use of centralized exchanges could assist law enforcement — Match Systems
Santiago Melgarejo, a former nonfungible token analyst and sales specialist for SafeMoon, reflected that the “warning signs were evident” all along, particularly when numerous employees were suddenly terminated despite many having worked a month without compensation.
SafeMoon was also compromised in March, resulting in a total loss of $8.9 million.
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